Keeping prices at this level is precisely how one or more competitor will rise up. Making memory isn’t super hard. That’s why it is a commodity. The problem with the memory market is that up and down cycles have bankrupted the vast majority of players in the past. Now we only have 3 players left except for a few smaller ones in China.

The reason memory prices can stay high for years in this mega cycle is because the 3 players will be very cautious on overbuilding. They’d rather under build, make great profit (not maximum) and reduce the risk of going bust if this suddenly ends.

Same for TSMC in chips.

Great opportunity for Chinese companies though. This shortage is exactly what Chinese companies need to scale.

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petra 33 minutes ago | parent | next [-]

//Making memory isn’t super hard. That’s why it is a commodity.

These two aren't related.

Dram is a commodity because the you can replace a chip from hynix with a chip from micron, the have the same behaviour.

And a price competitive Dram isn't easy manufacture, or China would have made it already.

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dymk 3 hours ago | parent | prev | next [-]

> Making memory isn’t super hard.

Then why do only 3 companies make it?

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aurareturn 3 hours ago | parent | next [-]

Bankruptcy risks.

When Samsung had to sell memory at a loss after COVID, no one came to save them. They buffered their memory division using profits from their other businesses. That’s how Samsung survives memory downturns.

According to some stories, this is how Samsung convinced TSMC to not enter the memory business - that you need a nation or other lines of business to prevent bankruptcies.

The market has stabilized to 3 players.

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dymk 3 hours ago | parent [-]

...And why do they go bankrupt?

Because it's an incredibly capital intensive process, involving billions of dollars of investment into manufacturing infrastructure.

That is to say, making memory is quite hard.

	▲	aurareturn 3 hours ago \| parent \| next [-]
		The technical process of making memory is relatively easy. Hence, it is a commodity. I didn’t say owning a memory business is easy.
	▲	kortilla 2 hours ago \| parent \| prev [-]
		You’re confusing two independent things. There are simple processes that are extremely capital intensive with long lead times and then there are complex processes that require lots of R&D and industry secrets. Memory is the former in the chip world. Other examples from outside of tech of easy but capital intensive processes are power generation and railroads. Very easy to do, but easy to end up broken by overbuilding for demand that fails to materialize or stay stable for the duration of your financing.

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DoctorOetker 3 hours ago | parent | prev [-]

Making the memory can be much easier than predicting future demand.

Placing the bet isn't as hard as making an accurate prediction.

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jazzyjackson 3 hours ago | parent | prev [-]

> up and down cycles have bankrupted the vast majority of players in the past

Exactly, so what’s the incentive for anyone to sink half a billy into building out more capacity.

The existing players get to rest on their laurels and succeed whether or not the AI bubble busts.

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aurareturn 3 hours ago | parent | next [-]

The incentive is that your 2 competitors will build more than you and gain market share on you if you are too conservative.

Samsung, SK Hynix, and Micron all have to balance between capex spending, making as much profit as possible, and risk of bankruptcy.

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deadbabe 3 hours ago | parent [-]

So are the new competitors currently in progress of starting up? Because it takes at least several years.

	▲	aurareturn 3 hours ago \| parent [-]
		Only Chinese companies have a chance. Problem is that China can’t buy EUV machines and the most advanced memory chips now use EUV. Heck, the US is now pressuring ASML to not sell even DUV machines to China, period.

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jtbayly 3 hours ago | parent | prev [-]

When costs are high enough, you can recoup that, if you have an appetite for risking the downturn.