> If you have a massive excess of demand ready to pay any price, and a limited supply, of course the sellers will take advantage, that's how any market work

The question is how quickly the supply adjusts. In a free market, the suppliers would respond to the price signal by quickly expanding their production to meet the elevated demand.

But a market captured by a cartel will be much slower to expand the supply.

So, the test isn't "how much is price going up" it's "how aggressively are the RAM producers expanding supply production"

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lvzw 2 hours ago | parent | next [-]

Memory fab build out times are years not months. The existing ones already run 24/7. If these companies could pull more supply out of thin air they would, but they cannot.

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mschild an hour ago | parent | next [-]

Would they?

Cartels aren't known for massively increasing production to satisfy all demand. Far from it I'd say, they're more likely to expand supply to such a level that they can still reap massive profits. Very few countries/companies have the knowhow and willingness to be able to build more.

OPEC is a perfect example of this behaviour. They set hearly production goals to keep prices high. Or the Quebec Maple Syrup Producers organization that limits the amount of syrup a farmer can produce and sell in a year to keep prices high.

	▲	33 minutes ago \| parent \| next [-]
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	▲	AnimalMuppet 12 minutes ago \| parent \| prev [-]
		But are the memory chip producers acting like a cartel? In the past they have not. When there was a shortage, they increased production as rapidly as they could build the new fabs, crashing the price of memory.

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tshaddox 20 minutes ago | parent | prev | next [-]

Large barriers to entry are anathema to competitive markets, so the conclusion here is still that firms are benefitting from the lack of a competitive market.

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

I didn't say the build out time was months.

I said:

> the test isn't "how much is price going up" it's "how aggressively are the RAM producers expanding supply production"

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duped 26 minutes ago | parent | prev [-]

I'm curious what the limiting factor is for "years not months" when building these fabs. DRAM is a commodity, there are only threeish major manufacturers, all have huge amounts of capital, multiple nations bend over backwards for new semiconductor production projects, and there seems to be unlimited money going into purchasing these things.

Even when it comes to manufacturing the tooling/testing infrastructure, it's just a question of money aiui.

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geodel 2 hours ago | parent | prev | next [-]

> But a market captured by a cartel will be much slower to expand the supply.

Oh yea, governments can fix by putting 100 billion in memory fabs right now, and when demand crater in decade or so, let tax payer eat the cost of those fabs. At least it will benefit poor computer users like me.

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HWR_14 44 minutes ago | parent | prev | next [-]

> In a free market, the suppliers would respond to the price signal by quickly expanding their production to meet the elevated demand.

Why would they?

And you claim to have historic examples where they did?

	▲	jcbrand 31 minutes ago \| parent [-]
		Generally speaking, if demand stays high, and existing suppliers don't increase supply, the high prices create an incentive and opportunity for new market entrants to increase the supply.

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HDThoreaun 2 hours ago | parent | prev [-]

Even if the memory market was completely competitive the time it takes to expand supply is measured in years. There was no way for them to serve the AI demand without reducing supply given to everyone else in the short run

	▲	ncallaway an hour ago \| parent [-]
		> There was no way for them to serve the AI demand without reducing supply given to everyone else in the short run I didn't say that there was a way to do it in the short run. I laid out what the test is to determine if there's cartel-like behavior or competitive-market-like behavior. I will say, in a market with only 3 players and very high cap-ex cost, my prior is that you're likely to see more cartel-like behavior than competitive-market-like behavior, but that's still to be determined.