Comment by ACCount39
5 hours ago
The reason why the memory cartel fucked everyone over isn't exactly the pricing. It's the supply. It's that the established manufacturers all agreed on "AI demand is a fluke, we wouldn't rush to online new manufacturing capacity" back in 2022.
A calculated move. If they're right and the AI demand is a fluke, they don't overinvest in expensive manufacturing infra, they don't get saddled with more capacity than they need, and there is no memory glut eating their margins in the future. If they're wrong and the AI demand isn't a fluke, they get to pad their margins big time, and the supply bottleneck isn't their problem. As long as they shake hands and bet on "fluke" in sync, the downside is very limited for all of them.
They shook hands, they bet in sync, and they were wrong. Now the supply bottleneck is everyone's problem.
Potentially even theirs - if Chinese vendors can use it to wedge themselves into the market when it's at its most lucrative, and invest in growth. Which they almost certainly will.
> The reason why the memory cartel fucked everyone over isn't exactly the pricing
Let's not rewrite history: Sam Altman kicked this off by trying to corner the memory market to get an edge over his competition...in return for only a year's supply of memory. The resulting supply squeeze has been very profitable to the RAM manufactures, and will last many multiples of OpenAI's initial contracts, so they can't be too mad at him for bot disclosing his other wafer deals during negotiations. They can afford to gift him a thank-you yacht named the "Adverse Supply Shock"