Posted by walterbell 1 day ago
https://www.tomshardware.com/pc-components/dram/openais-star...
> South Korean SK Hynix has exhausted all of its chip production for next year and plans to significantly increase investment, anticipating a prolonged "super cycle" of chips, spurred by the boom of artificial intelligence, it said on Wednesday after reporting a record quarterly profit.
https://en.ilsole24ore.com/art/korean-chip-race-sk-hynix-has...
> Adata chairman says AI datacenters are gobbling up hard drives, SSDs, and DRAM alike — insatiable upstream demand could soon lead to consumer shortages
https://www.tomshardware.com/tech-industry/big-tech/adata-ch...
But there have been plenty of articles over the last decade saying that it was done around 2015 or so.
I would say that a claim about component cost has something to do with price.
I suspect they would rather face shortages then satisfy market demand.
And on top of that fear, you have the pure technical reality: you can't just flip a switch and start pumping out wildly complex HBM instead of mass-market DDR5. That's like trying to retool a Toyota factory to build Bugattis overnight. So you get this perfect storm: a massive, near-vertical demand spike hits an industry that's both terrified of risk and physically incapable of moving fast. So yeah, they're absolutely milking the situation for all it's worth. But it's happening less because they're master villains and more because they're both scared and incredibly slow
overproduction means unsold units which is very bad, you pay a cost for every unsold unit
underproduction means internal processes are strained, customers are angry, but a higher price per a unit... can you increase the price by more than you are underproducing?
I think the Nintendo ecosystem has been a pretty good example of where intentional underproduction can backfire. Another example might be that migration to SSD was likely accelerated by (forced) underproduction of spinning disks in 2011. We use SSDs for a lot of things that traditional magnetic media would be better at simply because the supply has been so overpowering for so long.
You can train your customers to stick with you by bathing them in product availability. Overproduction can be a good thing. Inventory can be a good thing. We've allowed a certain management class to terrorize us into believing this stuff is always bad.
Doubtful. A shortage is normally a scary prospect for a vendor. It means that buyers want to pay more, but something is getting in the way of the seller accepting that higher price. Satisfying market demand is the only way to maximize profitability.
Why do you think companies would prefer to make less profit here?
Because if you make too much profit, you get regulated by government.
Either way, without competition expect it to increase further.
The other way I look at this is that these companies have been collecting an insane amount of wealth and value over the last 2-3 decades, are finally in a situation where they feel threatened, and are willing to spend to survive. They have previously never felt this existential threat before. It's basically bidding wars on houses in San Francisco, but with all the wealthiest companies in the world.