Comment by pjc50
3 hours ago
Supply is both already constrained and AI companies have pre-purchased enough HBM at enough of a premium that most of the wafers are allocated to them. All the intermediaries are jacking up their prices so their inventory doesn't empty too quickly, because they may not be able to refill it.
It is hard to overstate the damage that the infinite money being poured into AI is doing to the wider economy. Anything involved in datacenters is going to experience shortages/price rises. A pre-existing problem is power transformers: https://www.reuters.com/business/energy/us-power-transformer...
The impact on domestic electricity prices in a year just after high oil prices is not going to be popular either.
> It is hard to overstate the damage that the infinite money being poured into AI is doing to the wider economy.
I get what you're saying but medium term this is an extremely funny sentiment. This money being poured is likely to end up being a huge boon for a lot of economic sectors, including in the US. Most commodity shortages like this end in a glut, with a medium term win for consumers, even if we have 1-2 (more) years of pricing pain. Meanwhile expensive RAM has so far left stock for people that really need it. Calling this kind of demand economic damage is odd.
The problem is that the medium term prospects are irrelevant to all the businesses that won't be around long enough to enjoy them.
Smaller businesses in particular - not so long past the COVID disruption and already facing significant challenges in areas like logistics and energy supply costs - will not necessarily have the reserves that older and larger businesses often do to withstand another multi-year price shock.
> Most commodity shortages like this end in a glut
The 3 RAM manufactures know this too, from painful experience. There won't be a glut this cycle because there are no capacity build-outs. Instead of increasing capacity, some OEMs left the consumer segment to focus on enterprise AI.
> Calling this kind of demand economic damage is odd.
It's not odd at all because the complementary industries are being damaged - possibly permanently: manufacturers of motherboard, cases, fans, and the entire consumer PC supply chain are being negatively impacted. Expect bankruptcies and consolidation if this lasts for 2 more years.
Good that there is a _fourth_ one. That's actively ramping up and looking to increase market share. CXMT.
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> I get what you're saying but medium term this is an extremely funny sentiment.
Sentiment is the right word here. None of us really know, and go by feeling. If you perceive the AI boom as approaching tulip craze levels of irrationality, it feels pretty dire.
The RAM is a commodity and may be repurposed afterward. This kind of thing is a bit like a debt jubilee when the dust clears and survivors scavenge the dead. But a lot of other build-out may essentially be waste. To me, apologists for this boom seem to be harboring a variant of the broken windows fallacy. Not all economic activity is productive.
The other kind of damage is opportunity cost. How many players in other industries are being strategically harmed by this situation? We can't all just live on AI token output if these other industries retract too far.
> This money being poured is likely to end up being a huge boon for a lot of economic sectors, including in the US.
No such thing as a free lunch. Whilst a lot of industries are doing extremely well right now (i.e. everything involved in datacenter construction), everyone else has to actually pay for it.
Therein also lies the damage; The economy wasn't doing so great to begin with, and now this massive multi-trillion-dollar expense has been added.
The direct expenses come out of the pockets of Big Tech, but all the indirect stuff like the DRAM crisis affect the wider economy directly.
It's not odd at all to call this economic damage unless you're that disconnected from anything but AI/high-tech SV companies.
There's smaller businesses that I know _need_ data capacity (hard drives) that can't afford them and are facing serious CAPEX challenges.
I work for a start up that helps folks move off of existing on-prem virtualization solutions and every small to medium company across every sector you can think of aren't just able to not afford additional storage and memory, they can't find them either.
There isn't as much stock as you think. I can't wait for this AI bubble to pop. It's been absolutely terrible for 90% of the industry.
Yup. Once production ramps up (and then subsequently overshoots) in the next couple years we're going to have GPUs with 96GB VRAM for the price of a 4090 today.
They're not ramping up capacity though.
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> This money being poured is likely to end up being a huge boon for a lot of economic sectors
The evidence coming out is saying otherwise.
> It is hard to overstate the damage that the infinite money being poured into AI is doing to the wider economy
I know it's an unpopular opinion on Hacker News but I think most people are overstating the damage to the economy. Increased demand starts to pull more advancements forward and increase spending on production, which benefits everyone.
Transformer demand is real, but what percentage of your electricity bill do you think goes to spending on those transformers? The number is so small that it's a rounding error. Many examples like this where we see headlines about some part going up in price and forget that it's such a negligible piece of our bill that it barely matters.
The cost of fuel inputs for base generation and peak supply are a bigger factor.
> I know it's an unpopular opinion on Hacker News but I think most people are overstating the damage to the economy.
There are two issues... one being that an economy needs people to buy things to work, and people only can buy things if they have money, and people only have money when they have work - but everyone is laying off people left and right due to "AI".
The other issue is that there's trillions of dollars floating around between all the companies. It is likely that a significant chunk of these will fail and give us another 2007.