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As AI gobbles up chips, prices for devices may rise

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Re: As AI gobbles up chips, prices for devices may rise

#211

Post by tirant »

01HNNWZ0MV43FF wrote: post #143
torginus wrote: post #133

It's somewhat alarming to see that companies (owned by a very small slice of society) producing these AI thingies (whose current economic is questionable value and actual future potential is up to hot debate), can easily price the rest of humanity out of computing goods.

Without regulation, money begets money and monopolies will form. If the American voter base doesn't pull its shit together and revive democracy, we're going to have a bad century. Yesterday I met a man who doesn't vote and I wanted to go ape-shit on him. "My vote doesn't matter". Vote for mayor. Vote for city council. Vote for our House members. Vote for State Senate. Vote for our two Senators. "Voting doesn't matter…

What regulation are you expecting to be passed and why do you believe monopolies are bad?

If a monopoly appears due to superior offerings, better pricing and quicker innovation, I fail to see why it needs to be a bad thing. They can be competed against and historically that has always been the case.

On the other hand, monopolies appearing due to regulations, permissions, patents, or any governmental support, are indeed terrible, as they cannot be competed against.

Re: As AI gobbles up chips, prices for devices may rise

#212

Post by tirant »

arnaudsm wrote: post #188
UltraSane wrote: post #158

Earlier quoted context omitted.

Supply should increase as a response to higher prices, this bringing prices down.

That's economical theory, but the real world is often non-linear. Crucial is dead. There's a finite amount of rare earth. Wars and floods can bankrupt industries, supply chains are tight.

Those are all temporary events and circumstances.

If the market is big enough, competitors will appear. And if the margins are high enough, competitors can always price-compete down to capture market-share.

Re: As AI gobbles up chips, prices for devices may rise

#213

Post by SunlitCat »

magicalhippo wrote: post #156
greesil wrote: post #94

Earlier quoted context omitted.

Apparently Google fucked up https://www.google.com/amp/s/www.indiatoday.in/amp/technolog...

Non-AMP link: https://www.indiatoday.in/technology/news/story/ram-shortage...

To be honest, it starts to look more and more like a single company (we all know which one), is just buying up all DRAM capacities to keep others out of the (AI) game.

Re: As AI gobbles up chips, prices for devices may rise

#214

Post by mschuster91 »

lotsofpulp wrote: post #196
arnaudsm wrote: post #188

Earlier quoted context omitted.

That's economical theory, but the real world is often non-linear. Crucial is dead. There's a finite amount of rare earth. Wars and floods can bankrupt industries, supply chains are tight.

The business that owns crucial is producing more chips than ever. Rare earth metals are in the dirt around the world. Supply and demand curves shifting, hence prices increasing (and decreasing) is an expected part of life due to the inability to see the future.

> Rare earth metals are in the dirt around the world.

They are. The problem is, the machinery to extract and refine them, and especially to make them into chips, takes years to build. We're looking at a time horizon of almost a decade if you include planning, permits and R&D.

And given that almost everyone but the AI bros expects the AI bubble to burst rather sooner than later (given that the interweb of funding and deals more resembles the Habsburg family tree than anything healthy) and the semiconductor industry is infamous for pretty toxic supply/demand boom-bust cycles, they are all preferring to err on the side of caution - particularly as we're not talking about single billion dollar amounts any more. TSMC Arizona is projected to cost 165 billion dollars [1] - other than the US government and cash-flush Apple, I don't even know anyone able, much less willing to finance such a project under the current conditions.

Apple at least can make use of TSMCs fab capacity when the AI bros go bust...

[1] https://www.tsmc.com/static/abouttsmcaz/index.htm

Re: As AI gobbles up chips, prices for devices may rise

#215

Post by InsideOutSanta »

UltraSane wrote: post #158
torginus wrote: post #133

It's somewhat alarming to see that companies (owned by a very small slice of society) producing these AI thingies (whose current economic is questionable value and actual future potential is up to hot debate), can easily price the rest of humanity out of computing goods.

Supply should increase as a response to higher prices, this bringing prices down.

As far as I can tell, none of the companies producing memory chips are increasing production because they don't know if the current demand is sustainable.

Increasing memory production capacity is a multi-year project, but in a few years, the LLM companies creating the current demand might all have run out of money. If demand craters just as supply increases, prices will drastically decrease, which none of these companies want.

Re: As AI gobbles up chips, prices for devices may rise

#216

Post by baobabKoodaa »

testbjjl wrote: post #170
torginus wrote: post #133

It's somewhat alarming to see that companies (owned by a very small slice of society) producing these AI thingies (whose current economic is questionable value and actual future potential is up to hot debate), can easily price the rest of humanity out of computing goods.

> It's somewhat alarming to see that companies (owned by a very small slice of society) producing these AI thingies (whose current economic is questionable value and actual future potential is up to hot debate) Some might conclude the same for funds (hedge funds/private equity) and housing.

I'm confused. When you say that hedge funds "price out" regular people, what do you mean? Price out of what?

Re: As AI gobbles up chips, prices for devices may rise

#217

Post by Ekaros »

UltraSane wrote: post #158
torginus wrote: post #133

It's somewhat alarming to see that companies (owned by a very small slice of society) producing these AI thingies (whose current economic is questionable value and actual future potential is up to hot debate), can easily price the rest of humanity out of computing goods.

Supply should increase as a response to higher prices, this bringing prices down.

Rational actors in game know that this demand spike is most likely temporary. So investing in more production only to face glut in future dropping margins to nearly nothing is not rational move.

This has been played out before so it is only natural that they are careful with increasing the supply. And while they don't response they are netting larger margins than before.

Obvious end result is that demand will drop as price goes up. The other natural part of supply-demand curve.

Re: As AI gobbles up chips, prices for devices may rise

#218

Post by InsideOutSanta »

gehatare wrote: post #159
jstanley wrote: post #155

Earlier quoted context omitted.

You don't think that as prices go up, the supply might also go up, and the equilibrium price will be maintained? And possibly even a lower equilibrium will be reached due to greater economies of scale.

Is there any reason to believe that this will happen? Prices of graphic cards only went down after the crypto boom went down again.

And they never went down to pre-crypto pricing. For quite a while, Intel was the only company producing reasonably specced GPUs at somewhat reasonable prices.

Re: As AI gobbles up chips, prices for devices may rise

#219

Post by elorant »

palmotea wrote: post #139
torginus wrote: post #133

It's somewhat alarming to see that companies (owned by a very small slice of society) producing these AI thingies (whose current economic is questionable value and actual future potential is up to hot debate), can easily price the rest of humanity out of computing goods.

> It's somewhat alarming to see that companies (owned by a very small slice of society) ... can easily price the rest of humanity out of computing goods. If AI lives up to the hype, it's a portent of how things will feel to the common man. Not only will unemployment be a problem, but prices of any resources desired by the AI companies or their founders will rise to unaffordability.

Affordable computing is what created the economy. If you take that away people in poorer countries can no longer afford a phone. Without a phone a lot things that we consider a given will not be functional anymore. The gaming industry alone including phones is a whooping $300bn. This will take a significant hit if people have to pay a fortune to build a rig, or if their phones are so under-powered that they can't even play a decent arcade game. Fiber is not universal so that all of this to be transferred to the cloud. We tend to forget that computing is universal and it's not just PCs.

Re: As AI gobbles up chips, prices for devices may rise

#220

Post by SunlitCat »

I really wonder when the point will be reached at which the South Korean government steps in and starts to take a closer look at the growing long-term supply commitments that companies like OpenAI are indirectly driving with major memory manufacturers such as SK hynix and Samsung Electronics.

Allocating a very large share of advanced memory production, especially HBM and high-end DRAM, which are critical for almost all modern technology (and even many non-tech products like household appliances) to a small number of U.S. centric AI players risks distorting the global market and limiting availability for other industries.

Even within Samsung itself, the Mobile eXperience (MX) Business (smartphones) is not guaranteed preferential access to memory from Samsung’s Device Solutions (DS) Division, which includes the Memory Business. If internal customers are forced to source DRAM elsewhere due to pricing or capacity constraints, this could eventually become economically problematic for a country that relies very heavily on semiconductor and technology exports.

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