I wonder why the hyperscalers aren't vertically integrating more and building their own fabs. Sure, a fab costs a billion dollars, but they're currently spending hundreds of billions of dollars purchasing chips from NVidia and others.
Memory has grown to nearly two-thirds of AI chip component costs
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Re: Memory has grown to nearly two-thirds of AI chip component costs
#32Here’s the thing, what if memory manufacturers take this opportunity to collude and basically never reduce the price of memory below the current levels since it’s too hard for a new competitor to just rise up and undercut them? Everything I hear about is how hard and risky it is to spin up a new fab. And by doing this, they ensure local LLMs never become feasible for the vast majority of people and AI companies solid…
Keeping prices at this level is precisely how one or more competitor will rise up. Making memory isn’t super hard. That’s why it is a commodity. The problem with the memory market is that up and down cycles have bankrupted the vast majority of players in the past. Now we only have 3 players left except for a few smaller ones in China. The reason memory prices can stay high for years in this mega cycle is because the…
> Making memory isn’t super hard.
Then why do only 3 companies make it?
Re: Memory has grown to nearly two-thirds of AI chip component costs
#33I recently built a system at insane ddr4 prices ($2000 for 256gb). But that’s only after seeing how ddr5 prices were 3-4x that!
Re: Memory has grown to nearly two-thirds of AI chip component costs
#34I bought 96GB of RAM a couple of years ago for ~$250. That same RAM now costs $1200!
It is one of the thing with consumer when they remember they brought it at the absolutely lowest price point when DRAM maker were bleeding money. Those are not normal pricing. Before the pricing collapse in early 2020, 96GB DDR5 would have cost about $450 to $500. And I will need to restate again the cost of DRAM hasn't really changed much in the past 20 years. Its price just goes up and down in cycles. So in reality…
> Crucial are already selling DRAM made by CXMT.
Crucial was disestablished this year.
Re: Memory has grown to nearly two-thirds of AI chip component costs
#35Re: Memory has grown to nearly two-thirds of AI chip component costs
#36Earlier quoted context omitted.
Keeping prices at this level is precisely how one or more competitor will rise up. Making memory isn’t super hard. That’s why it is a commodity. The problem with the memory market is that up and down cycles have bankrupted the vast majority of players in the past. Now we only have 3 players left except for a few smaller ones in China. The reason memory prices can stay high for years in this mega cycle is because the…
> up and down cycles have bankrupted the vast majority of players in the past Exactly, so what’s the incentive for anyone to sink half a billy into building out more capacity. The existing players get to rest on their laurels and succeed whether or not the AI bubble busts.
When costs are high enough, you can recoup that, if you have an appetite for risking the downturn.
Re: Memory has grown to nearly two-thirds of AI chip component costs
#37I wish I had figured that out a year ago. MU up ~10x, SNDK up ~37x. My crystal ball is woefully under performing.
Re: Memory has grown to nearly two-thirds of AI chip component costs
#38Earlier quoted context omitted.
It is one of the thing with consumer when they remember they brought it at the absolutely lowest price point when DRAM maker were bleeding money. Those are not normal pricing. Before the pricing collapse in early 2020, 96GB DDR5 would have cost about $450 to $500. And I will need to restate again the cost of DRAM hasn't really changed much in the past 20 years. Its price just goes up and down in cycles. So in reality…
> Crucial are already selling DRAM made by CXMT. Crucial was disestablished this year.
He probably meant Corsair which is the DRAM brand selling CXMT produced chips.
Re: Memory has grown to nearly two-thirds of AI chip component costs
#39Earlier quoted context omitted.
Keeping prices at this level is precisely how one or more competitor will rise up. Making memory isn’t super hard. That’s why it is a commodity. The problem with the memory market is that up and down cycles have bankrupted the vast majority of players in the past. Now we only have 3 players left except for a few smaller ones in China. The reason memory prices can stay high for years in this mega cycle is because the…
> Making memory isn’t super hard. Then why do only 3 companies make it?
Bankruptcy risks.
When Samsung had to sell memory at a loss after COVID, no one came to save them. They buffered their memory division using profits from their other businesses. That’s how Samsung survives memory downturns.
According to some stories, this is how Samsung convinced TSMC to not enter the memory business - that you need a nation or other lines of business to prevent bankruptcies.
The market has stabilized to 3 players.
Re: Memory has grown to nearly two-thirds of AI chip component costs
#40Time to let ASML sell to the Chinese memory producers … or not.