Comment by officialchicken
12 hours ago
> 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).
> 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.
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.
> 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.
This also describes the U.S.A. steel industry. "Heavy state backing" and "not allowed to go bankrupt" often result in particularly terribly-performing industries. If anything, it's notable that China seems to buck that particular trend.
Not sure "only the Chinese model can solve the normies pain" is a great look.
Lately consumers are told capitalism is cheap TVs, phones, and computers while housing, healthcare, education, energy, and food climbed further out of reach. The "bread" part of bread and circuses has shrunk dramatically, "but at least you're getting cheaper circuses" is what they've been saying.
Now you're saying only a heavily state-directed Chinese model is still willing to aggressively finance new fabs and meet demand to provide that? "Capitalism demands we don't expand capacity and don't meet demand' is kinda a tough sell after capitalism has been sold as expanding access. "Consolidation, maximal extraction, shareholder preservation, and AI" isn't going to be a winner. I get it makes business sense and wouldn't be a big deal in the past, but the rapidly changing dynamics hitting nearly every part of daily life across the entire economy feels destabilizing.
We're down to wearing dystopian sci-fi level cheap clothes, can't afford chips/sodas, candy/sweet treats have been enshitified to no longer be fulfilling, we can't afford to call an ambulance. Media is polarizing instead of mass media calming. Heck thrift stores are becoming unaffordable to the low end as the middle now resorts to them.
"You don't have the foods you are used to, decent clothing, shelter, health, or social cohesion but you have a sweet 6 year old phone and flock cameras keeping you safe". Jesus it feels... not good. Even cyberpunk dystopia understood you needed to at least jack people into something.
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.
Yes, there are a bunch of bizarre comments in here. "Why aren't they rushing to make more fabs? Don't they know China is using this moment to the enter the market in a big way?" Yes, they do! And building more fabs would make that worse. The last thing you want to do before a state-backed player enters the market in a boom cycle is load up on debt to produce more capacity just before the bust.
It's a bit surprising many here are referencing the memory supply cycles without mentioning this revolutionary new application for memory people call AI. It'd be like talking about weather cycles and climate without mentioning global warming. Just like the planet is not going to get colder on average than it was for the foreseeable future, we're not going to need less memory for the foreseeable future.
China is trying to be vertically integrated, completely independent of outside influences and own the future supply/means of production. Memory and chips are piece of their larger plan. In any event, whatever China brings online will be absorbed - imagine a future where people's home computer has 100 to 1000GB of RAM in one variety or another. Folks are going to want better chips and more memory for years to come, supply will be absorbed.
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