Comment by kopirgan
11 hours ago
Very well written sub.
Any prediction on when it'll end? Can Chinese companies scale up to scare the big 3 into increasing capacity or lose price control?
11 hours ago
Very well written sub.
Any prediction on when it'll end? Can Chinese companies scale up to scare the big 3 into increasing capacity or lose price control?
It will end slowly, and then very suddenly.
The demand for AI simply doesn't exist at the real prices. It barely exists at the current subsidized rates - Microsoft, Google, Meta, Anthropic, OpenAI are spending hundreds of billions to make mere billions.
And then these data centers will be worthless, future ones won't get built, memory demand will evaporate on the spot.
Very interesting and thoughtful comment. I agree. When demand from hyperscalars drops rapidly after the tide goes out and everyone realizes that they can't continue building out the data centers, then fabs will be left with overcapacity that will flood the market. Wondering what this will mean for local LLMs when good RAM is available for cheap?
I'm yet to see any convincing argument that inference is subsidised in any substantial way. Training and speculative expansion are where the spend is from what I can see.
A few days ago Gemini redid their rate limits, making images/audio/video generation much more expensive, shrunk limits across the board (including a new weekly limit) and added more expensive tiers.
At the moment you can pay $20/month to do thousands of expensive queries a month (involving file uploads, the Pro model, extended thinking), and evidence suggests that heavy users are not profitable.
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If inference was profitable - they'd tell us. Msft, goog, public companies. They'd break out the numbers and show us, if they were good.
But instead, all we get is known liars going on podcasts and repeating "stylized facts" that aren't literally true about their supposed profitability on inference, from companies losing billions per year in a situation where they don't have to tell the truth.
That is VERY far from a convincing argument that they are profitable. So I can & will safely conclude that the opposite is true.
I have the same opinion, these AI companies can't even work financially with the cheap ram prices, they certainly won't with high prices.
And ram producers are betting on it, they will just milk the AI companies until they collapse.
The Chinese memory makers can scale up but the amount of capacity they currently have is negligible. They're in the same boat as everyone else, it's just that nobody expects them to curtail production on purpose to raise prices even higher, whereas that's expected behavior (according to the article) from the established memory makers.