Don’t the memory makers always get left holding the bag? I feel this has happened at least three times before.

formerly_proven 3 hours ago | parent | next [-]

DRAM and to a lesser degree storage are notorious for their feast and famine cycles

(Well that and collusion)

	▲	bombcar an hour ago \| parent [-]
		I don’t know if they realize that collusion lends itself to feast/famine.

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whatever1 an hour ago | parent | prev [-]

All of the capital intensive businesses face this issue. Chemicals, Shipping, Semiconductors etc.

You get market signals that the demand is there, you acquire the necessary capital, you spend 5 years to build capacity, but guess what, 5 other market players did the same thing. So now you are doomed, because the market is flooded and you have low cash flow since you need to drop prices to compete for pennies.

Now you cannot find capital, you don't invest, but guess what, neither your competitors did. So now the demand is higher than the supply. Your price per unit sold skyrocketed, but you don't have enough capacity!

Rinse and repeat.

Capitalists claim that this is optimal.

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lsiq 26 minutes ago | parent | next [-]

The book Capital Returns: Investing Through the Capital Cycle details this phenomenon, including historical cases.

If anything, it shows it's possible for you to arbitrage this and in doing so help "smooth out the cycle."

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kev009 33 minutes ago | parent | prev | next [-]

Is the DRAM industry really capitalist? Focusing on just the Korean parties, it functions like a command economy. I would say the same about most high end semi-conductor manufacturing, TSMC, Intel, ASML are being commanded and driven by nation-state level decision making. Right now the command is to focus on high wattage centralized AI systems at the expense of everything else.

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wordpad 34 minutes ago | parent | prev | next [-]

>Capitalists claim that this is optimal.

It's more optimal than planned economies until we have AI planned economies with realtime feedback, I guess.

Consumers get cheap goods during oversupply and most inefficient companies get elliminated during bust while consolidation leads to economies of scale.

	▲	whatever1 11 minutes ago \| parent [-]
		No this is literally a sign of an unstable system with too high of a gain K. There is an alternative where legislation dampens this behavior but the short term profits will be lower. Hence the hawks don’t like it.

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tgma 38 minutes ago | parent | prev [-]

> Capitalists claim that this is optimal.

Because that does not happen exactly as you say for all players. The demand signals will be processed and long-term risk is balanced against short-term gain in a distributed fashion, so not everyone will do the same.