Posted by phront 15 hours ago
It is wise for these Chinese fabs to eventually use a very aggressive dumping strategy to price well below cost push out other players forever, especially in DRAM.
But right now it seems they can max out their supply capacity without selling below cost.
Appears to me like China's endless state led (often unproductive) investment in semiconductor manufacturing subsidies (for decades) is about to pay off with some industry dominance soon.
Like the electric vehicle sector.
Look at the 12/13/14th 5 year plan (the most recently passed). Do you think they achieved their goals?
If your headcanon is that the CCP is inept because they caused crop failures 60 years ago... you could stand to take a look at what they're doing today.
There are sooo many variables in how one could go about making and executing five year plans. They must have figured out a couple of things that tend to work.
Crucial's departure from the consumer market left such a gaping hole, that CXMT doesn't even need to push other players out to gain a footing.
If they didn’t have a documented history of running cartel price fixing schemes for LCD/OLED display tech, NAND, and DRAM, I’d maybe agree with you but we have the history. They cry every time about China ‘dumping’ for not going along with the racket.
The downside in general is that other countries lose production capacity in steel, heavy industry, semiconductors, machine tools etc - industries that took decades to build and can't be easily replaced.
Also they gradually lose the ability to meaningfully innovate in those sectors because there's no grounding against production reality anymore.
This has geopolitical consequences further down the line.
As though moving production to China wasn’t something the West did intentionally.
And now continues to push manufacturing out of Western countries by, for example in the UK and Germany, and Australia too, making electricity and gas so expensive it becomes cost prohibitive to manufacture much at all.
That's not really what happens though. You don't actually "lose" capacity, you just move to higher-valued special niches within the overall industry because (1) you can afford to, while low-cost competitors can't and (2) you can no longer expect to be the lowest-cost supplier for the bulk of the market. That's a win-win development and something to be encouraged.
That's not what people mean by "lose" capacity.
Suppose DRAM companies expand capacity because prices are high, then demand levels off, the price crashes, and they all go out of business except for the one in China which gets a government bailout. That's fine, right? We're not interested in making DRAM, that's a fungible commodity, we want to make iPhones or something. (They make those too anymore, but never mind that.)
What happens now if China restricts what you can buy to give an advantage to their own companies who are trying to displace you in the higher-valued special niches? Or just raises the price for you and not them? What if there's a trade war? Or a conventional war?
When you still have a domestic industry, you go to them and have a source for the commodity. If only one country becomes the sole global supplier and that country isn't even particularly friendly, that's bad.
You can't just spin up a 2nm wafer fab when the latest you've been running is a 300nm process.
Compare: US shipbuilding industry to China or SK.
Factories, tooling, supply chains, and engineering knowledge aren't fungible in the way they would need to be for your statement to be true.
That's not completely accurate - since the bw between these are different, the routing and therefore propagation delays for DDR4 won't allow it to magically be used as DDR5 or HBM.
If you design for the most strict timings, then sure.
Everyone wanted denarius then escudos then guilders then pounds then dollars and soon yuan. They make stuff over there, you can buy it with yuan.
I think India might come after that but Africa is sure to follow. Give it a few hundred years.
"easily" is doing a lot of work in that sentence. Depending on the good and what they switch to making, this may neither be easy nor quick.
the question is if single country can carry all these industries at loss for prolonged period of time.
Another approach is to rely on international supply chain and speed of innovation, we can't produce steel domestically profitably today, fine, we may buy it from diversified international supplier network, and rebuild it fast tomorrow if needed using new tech, and focus on many other high margin verticals, instead of putting many billions of resources into infra which could be obsolete tomorrow.
There are more elements to it though which can be sort of hard to explain.
There are whole cultures and ways of thinking built around production. The children of engineers who worked on xyz v1.0 have a genuine advantage when its time to work on xyz v2.0. There is a lot of tacit knowledge in these engineering fields and you have a huge advantage in knowledge retention if you can maintain unbroken chains of succession.
You can't achieve the top levels of ability (decades of experience, generational knowledge) if you are whip-sawing production to and fro across the globe every 10 years.
There are also cross pollination effects. Being in the same community with as many related fields as possible (co-located) is what drives cross-pollination and mobility of ideas and people between industries.
Think how many countries have tried to copy "silicon valley" and failed, and _why_ they failed.
What I'm saying is that technology is built by _people_ and there are human reasons why having local capacity is beneficial for all the related industries in the area.
my point is that other children with no extremely heavy investments into perl v1.0, will have some skills in c++ v1.0 and python v1.0, and will have advantage in adapting Tensorflow v1.0, which is more valuable than skills in perl v2.0. Heavily investing in one industry you sacrifice some flexibility.
So, this is multifactor analysis, lets say wise American people will elect me as next president, I would create list of industries, assign metrics (national security importance, potential revenue in 5y from now, impact on other industries, potential margin, risks of failure, etc), then build some formula which aggregate those metrics into single, and base on final metric allocate weighted funds to support N top industries.
Second, they can drive out all competition and then have a captive audience for whatever prices they want, as the barriers to entry in these markets are very high. This is essentially what's happened with all higher-end manufacturing in the west over the past 30+ years.
Do you think they are just stupid?
They kind of had to do this, because their large amount of exports were pushing the value of it up compared to others.
I challenge you to name a single successful example of this that isn’t state enforced.
The entire business model of VC funded tech?
Simply overcoming startup capital costs is not the argument being made when folks claim dumping.
VC money is used to scale up, cut costs with scale, capture markets, and then usually prices go up later depending on the economics.
The Chinese state is basically just acting as a big VC fund for Chinese manufacturing industries. A VC fund with a sovereign currency and the ability to sustain burn-mode for decades.
It doesn’t always work. There are some absurd examples of Chinese waste produced this way like “ghost cities.” But when it works it works, and at tremendous scale, and they can just dominate entire industries.
It's all simply a fight for market share.
The original sin is the existing DRAM vendors selling their entire (spare) capacity to the likes of OpenAI.
The numbers aren't public but most guesses I've heard are that Anthropic's markup is around 50% on average, and that if considered in isolation, most models are profitable overall. The constant losses are instead due to training the next models, which will also eventually recoup but later, and forward capex investment.
This idea that big AI companies are normally and systematically selling inference at a loss as some kind of market share strategy is just not supported by the facts.
https://globalcio.com/news/16062/
You're maybe talking about the spot market, but companies are free to make any sort of supply contract.
It's not dumping, it's the opposite.
Sam Altman's stunt has created massive amounts of fictitious demand (OpenAI isn't using those wafers it's ordering) and triggered massive panic-buying from everyone else.
Prices are arteficially high, this has turbocharged China's fab and R&D budgets as you observe.
> is about to pay off with some industry dominance soon.
They're not looking to dump the semiconductor markets. They're looking to invade Taiwan.
All this buildout in their semiconductor industry is to detach themselves from the western semiconductor industry that will either sanction them if they invade Taiwan, or in the case of TSMC, suffer major damage in the ensuing conflict.
That the collapse/destruction of the Taiwanese semiconductor and electronics industries will utterly ruin the western tech industry is somewhere between a happy coincidence and acceptable collateral damage to them. No dumping required.
I realize Intel has done some serious ball dropping over the past two decades but you do realize the US has on shore cutting edge fabs, right? It's only luxury consumer electronics and the highest end corporate gear that use cutting edge nodes to begin with.
Disruption of the cutting edge would certainly wreak havoc on the pricing and specs of high end luxury electronics but that would hardly be the end of the world. I still use a desktop with DDR3 on a daily basis (granted the GPU is much newer with GDDR6) and my laptop is from the early era of DDR4 ...
> CXMT is in the process of converting wafer capacity equivalent to about 20 percent of its total DRAM output — some 60,000 wafers per month — at its Shanghai plant to the fourth-generation HBM3 chip production
Apple has planned to explore cooperation with Chinese memory chip manufacturers Yangtze Storage (YMTC) and Changxin Storage (CXMT) to strive for more favorable supply contracts [from the big three]I think this is because they are a huge conglomerate and there are divisions and groups that specialize in everything and their (Samsung) culture is to do everything as much as possible in house.
but sure if they are ordered to they will, good point too;)
There were crazy bubble economics schemes that meant doomed startups got unix boxes for free.
When the bubble popped, the workstation vendors hit a triple whammy: Inferior $/perf, unlimited used inventory at low prices, and an economic downturn.
The same exact thing is happening now, except the hardware is being jammed into data center models.
Anyway, when the bubble pops, people making affordable consumer stuff will be fine (like this CXMT company).
People that went all-in on firing all non-hyperscaler customers (like micron/crucial) will find they’re building the wrong chips for end-user devices, there is no server market anymore (for a few years), and they have a total addressable market of maybe 1000 distressed companies, globally.
I predict the people making these decisions and destroying their companies to juice Q2 2026 financial outlook numbers will genuinely be surprised when the bankruptcies start.
Turns out I got the wrong kit for that build and had to buy another. It was too late to return it.
Legacy DRAM is still over half of Samsung and SK hynix's production capacity. That's where the volume pain actually lands while they're betting everything on HBM4.
But they aren't going to stop whining about China, no matter how much pain the market experiences.
This feels like a short coming of western business/stock market thinking. Focusing on profit within the next few quarters, and not caring about the longer term consequences. For all it's flaws and shady business practises at least China can think beyond a single fiscal year.
This isn't a shortcoming, it's a competitive market working as intended.
They'll blunder. They'll do it even harder in the absence of competition.
Businesses blunder. "The market" is just a set of observations, including that competitors will tend to take advantage of those blunders. It is not a failure of the market that businesses have blundered, nor surprising that it will happen occasionally, and neither I nor mrweasel implied otherwise.
Yes, identifying a problem is easy. But solving shortages in all cases requires perfect knowledge of future demand. So, good luck.
Scratch that, we have to hate Chinese companies because they do business with the Chinese military, unlike Intel, Nvidia, Samsung who don't do business with the US and ROK military ... oh wait.
I suppose it'd be true that the standard of living of some Americans depends on China not succeeding — specifically, those Americans who own corporations competing with Chinese firms — but I think they'll survive just fine with only 10 yachts instead of 15.
And the standard of living of working class Americans has been on a steady decline since Reagan by the hand of US administrations, not by the hand of CHina.
This isn't defending anyone's standard of living, it's defending profits of domestic monopolies like Micron, who indulge in state subsidies from US taxpayers and then fuck then over on prices.
> They are adding capacity as quickly as they can [...], just like everyone else
https://www.tomshardware.com/pc-components/dram/memory-maker...
Even if we ignore the fact that you can't build out factories in secret, this would be securities fraud by publicly listed companies.
> ...as margins are too high
This is not the first RAM boom-bust cycle, and memory makers are an actual cartel convicted of coordinating in the past - none if them are going to break rank when they can invest the minimum and reap outsized benefits. Also, no one wants to invest in additional capacity when the bottom can fall out at anytime, and shareholders demand your head- not even the AI companies want to bear that risk, which is saying something.
It is really impossible to have quality long term thinking without capitalization accounting and similar instruments that come out of the "wester" system of business that chinese free enterprise gladly and speedily copied when it was made free.
If that's the case, then why are the cheapest options I can find online multiple times that much?
Currently they sell here in Germany for 409€ each, that's 6.25€ for half of each of the 16Gbit chips on that kit.
11.5*8 = 92. I'm seeing plenty of DDR4 sticks below that price.
Commodities markets aren’t like eBay, nobody is just going to FedEx you a barrel of oil.
I'm sure someone will if you pay enough. But you certainly won't be getting the market standard bulk price.
and unfortunately increase latency even more with registered DIMMs. Comparing bandwidth increase (50 GB/s) to the stagnated latency (~80..120 ns total, less than ~0.1 GB/s) over last decades, I'm wondering, whether one still can call today's RAM random memory (though sure it can be accessed randomly). Similar to hard disk drives. Up to 300 MB/s sequentially but only up to less than 1 MB/s 4KB random (read).