The memory makers will not expand demand drastically. It is in the nature of their business to keep the market under-supplied, otherwise the following oversupply will kill them. Instead, supply is just rerouted from less profitable segments such as mobile and personal computing.

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brandensilva an hour ago | parent | next [-]

China is about to flood the market and prove this notion wrong. If there is demand they want to meet it with supply.

But to your point, that is exactly how American companies like to play now. No one is stopping them from screwing over the consumer.

I have a Micron near me and they are building another chip facility but we are years away still so I suspect China will beat them to the punch.

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shdh an hour ago | parent | next [-]

Yeah, more global competition in DRAM would be great.

SK Hynix and Samsung are South Korean.

	▲	overfeed 31 minutes ago \| parent [-]
		> SK Hynix and Samsung are South Korean. The Korean memory makers are playing the same game as Micron and simply moving existing capacity up-market. GP was referring to upstart Chinese memory manufacturers like ChangXin, who - if their yields manage to catch the wave - could not have asked for a more favorable market after the big 3 have abandoned the consumer market. Consumers who would have otherwise turned up their noses at CXMT will not have the luxury.

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esseph an hour ago | parent | prev [-]

I suspect Chinese factories will get built first, but quality may take a few years to really nail down.

Basically:

China floods the market with cheaper but less QA'd parts, makes a gazillion dollars, is able to spend said money to fix yields / QA issues and streamline operations, by the time that happens Micron and maybe a few other existing players will have new memory production, and then we'll have a flood of cheap, reliable memory. 4yr, maybe?

	▲	cyost 5 minutes ago \| parent \| next [-]
		They're doing decent enough already for consumer electronics. Corsair is selling 16GB 6000MT/s CL36 DDR5 sticks in China using memory from CXMT: https://www.tomshardware.com/pc-components/ddr5/chinese-memo...
	▲	ahartmetz 7 minutes ago \| parent \| prev [-]
		It is not a law of nature that Chinese products are lower quality (cf. electric cars) and I don't see why they would go for that. They can just bin what they produce like everyone else and sell their products for what they have been tested to deliver.

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mlinsey 41 minutes ago | parent | prev | next [-]

If the existing memory makers retains control of the market and don't defect from the optimal-long-term equilibrium for themselves, that's true. It just takes one player to defect for short term gains as we've seen with some past boom-and-bust cycles. Alternatively, it takes a sufficiently-resourced player with enough incentive to enter the market themselves (NVidia, Google, Amazon, the PRC government through one of many companies...)

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

Relevant article posted on HN about this a few days ago: https://davidoks.blog/p/ai-is-killing-the-cheap-smartphone

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itopaloglu83 39 minutes ago | parent | prev | next [-]

Reminds me of how Samsung is giving out $340,000 per person bonuses. Shows you how much of a stronghold they have in market.

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ec109685 an hour ago | parent | prev | next [-]

Supply and demand always balance out. There is no way manufacturers aren’t going to compete away these inflated margins, as long as they feel like this demand is sustainable.

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kristopolous an hour ago | parent | next [-]

You know there's other strategies? Companies can be more clever than naively undercutting each other...

Memory in particular ... https://en.wikipedia.org/wiki/DRAM_price_fixing_scandal

The entry-cost to getting into memory is on the order of $billions and years - you can do just about anything...

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array_key_first an hour ago | parent | prev | next [-]

There's very few manufacturers, I believe 3 globally? And there's a large moat. Nobody can compete with them in the next 10 years. It's really not hard to coordinate action between 3 companies.

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KeplerBoy an hour ago | parent [-]

There are trillions to be made. That moat won't be as insurmountable in hindsight.

	▲	overfeed 17 minutes ago \| parent \| next [-]
		There used to be over 50 memory manufactures in the US alone. Everytime there was a bust (following a boom) there'd be bankruptcies. The lucky ones got bought out and consolidated. Empirically, attempting to capitalize on memory booms is a losing strategy.
	▲	array_key_first an hour ago \| parent \| prev [-]
		There really aren't though. The reason there's only three is because memory is a commodity and margins are historically very low. It's not a very good business to be in, generally. In the past when memory supply was short and then rebounded, many companies went out of business because making memory was no longer profitable.

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cco an hour ago | parent | prev [-]

Only in the most naive sense.

If it costs you $1B and five years to build out new supply and you think demand will not sustain for more than three years, it does not make sense to expand supply.

Instead you will maintain your margins currently and await demand to decrease back to your current supply.

This is pretty common and as others have pointed out is even more common in markets where competition is slow and lead times are long.

Ammunition is a great example over the last decade or so as political turnover caused relatively short lived demand spikes and manufacturers didn't expand supply because they knew once political winds shift, demand would decrease.

	▲	crazygringo 18 minutes ago \| parent [-]
		...which is presumably why GP said "as long as they feel like this demand is sustainable."

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jayd16 an hour ago | parent | prev [-]

Apple could always decide to build their own fab or some such thing.

	▲	simonh 24 minutes ago \| parent [-]
		That’s not the Apple way, but they might fund a supplier to build out capacity in return for priority access. The thing is they tend to only do that when they can get a technological competitive advantage. The priority access gives them a locked in competitive edge, for a while. It’s not clear there is an opportunity like that in memory.