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.

▲

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...

▲

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.

▲

KeplerBoy an hour ago | parent [-]

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

	▲	overfeed 16 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.

▲

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