Comment by kopirgan
14 hours ago
This has become like opec's best years. Only there's no cartel at least not openly.
But there's another key bottleneck. Even with all the money in the world, getting those machines that etch the RAM could be a multi year ration shop queue. And they're not making those companies every day!
> This has become like opec's best years
Yes, except no DRAM maker is taking this as a signal to go deep into debt to double or triple capacity. It takes a minimum of 3+ years to dramatically increase capacity and no one expects this inflated demand bubble to last that long. Because they've seen this cycle before, they'll bump next gen capacity up a bit more than planned, maybe 15-25% because the current windfall profits are enough to build a buffer to absorb the hit if that excess capacity comes online in the next DRAM demand crash.
In the meantime, they'll just apologize to everyone for the "market conditions beyond our control" while banking as much of these crazy profits as they possibly can while it lasts. But deep down they remember they were starving just yesterday and know they'll be starving again tomorrow.
I understand why everyone's pissed at the "evil DRAM makers" but I also remember boasting about how I scored some crazy cheap RAM sticks not so long ago. None of us were shedding tears when they were selling at a loss just to survive.
> Yes, except no DRAM maker is taking this as a signal to go deep...
Incorrect. CXMT is taking this as a signal to open new fabs, create new products, develop new silicon manufacturing techniques, and enter the consumer market worldwide (except USA).
CXMT is a company with heavy state backing and control that started its current trajectory years and years ago. It has infinity money and isn’t allowed to go bankrupt. CXMT is reading political signals (Beijing wants indigenous AI up and down the vertical) as much as market.
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> Incorrect.
Okay, you got me. I was reflecting the prudent way long-term players generally interpret the market. But from time to time external macro-economic and/or geopolitical factors may shift. Those changes may persist over time or eventually swing back like tides. Other times someone thinks they've got a new angle or a new technology (the RDRAM format was a notable attempt). Occasionally, the people who always say "But this time it's different" are lucky enough to actually say it one of the rare times it IS different.
Time will tell if CXMT's gambit will pay off. Even if it doesn't maybe their state sponsors will absorb the losses for other strategic reasons.
Isn’t that the point?
Everyone knows the commodity market (outside HBM) is going to be margin crushed within a few years… by CXMT, demand swings, and so on.
So nobody cares to fully meet the demand today. They are perfectly happy telling customers (those not willing to sign a 10 year contract paying up front at least) to go pound sand.
They don’t even need an OPEC like arrangement. They are effectively perfectly coordinated already in dismissing customers.
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