More demand exists so they can raise prices and still sell out their product to someone, most anyone will take free money on the table. Would expect the prices to go down only if more fabrication plants come online in numbers enough to satisfy that demand with way more supply, or if the demand plunges (ex. AI bubble pops)
But it can take billions of dollars and years of work to build fabrication plants so new supply is slow to come online… and they want to be REALLY sure that they won’t become bagholders of epic proportion by investing that kind of money into plants only for a bubble to pop which would leave them with a lot of debt but only able to sell oversupplied RAM at very low prices
They have fixed prices before but that looked different. See the circled area on the graph where there had been declining RAM prices but that decline suddenly stopped and became really stable? That period of 1998-2002 is where Hynix, Infineon, Micron Technology, Samsung, and Elpida were all found to have been fixing prices on RAM because all the supply they were bringing online was crashing the prices but they hoped to collude with each other to keep the prices stable rather than continuing to decline in price competition.
That coordination worked well for the way down (except when they got hit for hundreds of millions of dollars & euros in fees when it got discovered but eh), just a matter of agreeing on a number they all won’t go below. But how would they coordinate a continuous rise in lockstep with each other, that’s a LOT of phone calls anytime someone wants to buy? Why are many committing the billions of dollars to building new plants if they know that the only reason they’re making money hand over fist is avoiding selling product until it reaches a high price, why shell out money to bring supply up in that case? And why did their previous price fixing look only like a flat line if they were capable of having it go straight up? If they had that ability all along I don’t think you would have seen this somewhat sinusoidal graph with a sharply downward longtime trend for prices.
I just saw some of the video. Refers to a class action lawsuit and quotes from it heavily. The class action seems to not be alleging price fixing per se (meeting in a smoky room and determining price) but rather than they are colluding to all cut DRAM supply and profit from the price spiking since the demand is unchanged. Even to the point of forgoing profits.
It doesn’t seem all that convincing though so I don’t think it will go anywhere. Something similar was tried a couple years back that was shot down by the courts. It’s not illegal for competitors in the market to behave similarly if they consider it in their rational interest to do so, it’s only illegal if they are cutting a secret deal for it so you have to have some good quality “plus factors” to convince the courts that some shady deal is going on. If there are reasonable alternatives to explain the behavior other than collusion then your case is kind of cooked.
It’s easier if they have slack production that’s being left idle to point to (which still didn’t work earlier) but now they’re all trying to churn out as much HBM as possible for insatiable data center demand and are building new fabrication plants. The video said as one example that they have better margins on DRAM than HBM but while that may be true in the current state where everyone and their mom is focusing on HBM, one question that could be posed is would that remain the same if one of the major companies swapped focus? Like one of the three biggest gives up on chasing the AI money and stops making as much HBM to prioritize DRAM. That would cut the supply for the former and boost that for the latter, which would send prices up in what they just abandoned while crashing the prices into what they’re re-entering. They could secure a lot of market share in DRAM but that could be considered to be a sucker’s bet to sacrifice the foothold in HBM and enormous stacks of AI cash in exchange for cornering the market on an older technology. Also they are reaching agreements to make HBM at longer prices but for a guaranteed period of time which makes their margins on HBM weaker but also gives them confidence that they’ll be getting that smaller amount of money for sure even if we get an AI bust.
It should be noted that they haven’t become harder or more expensive to make. They just cost more.
More demand exists so they can raise prices and still sell out their product to someone, most anyone will take free money on the table. Would expect the prices to go down only if more fabrication plants come online in numbers enough to satisfy that demand with way more supply, or if the demand plunges (ex. AI bubble pops)
But it can take billions of dollars and years of work to build fabrication plants so new supply is slow to come online… and they want to be REALLY sure that they won’t become bagholders of epic proportion by investing that kind of money into plants only for a bubble to pop which would leave them with a lot of debt but only able to sell oversupplied RAM at very low prices
That’s a lot of words to say “illegal price fixing”.
They have fixed prices before but that looked different. See the circled area on the graph where there had been declining RAM prices but that decline suddenly stopped and became really stable? That period of 1998-2002 is where Hynix, Infineon, Micron Technology, Samsung, and Elpida were all found to have been fixing prices on RAM because all the supply they were bringing online was crashing the prices but they hoped to collude with each other to keep the prices stable rather than continuing to decline in price competition.
That coordination worked well for the way down (except when they got hit for hundreds of millions of dollars & euros in fees when it got discovered but eh), just a matter of agreeing on a number they all won’t go below. But how would they coordinate a continuous rise in lockstep with each other, that’s a LOT of phone calls anytime someone wants to buy? Why are many committing the billions of dollars to building new plants if they know that the only reason they’re making money hand over fist is avoiding selling product until it reaches a high price, why shell out money to bring supply up in that case? And why did their previous price fixing look only like a flat line if they were capable of having it go straight up? If they had that ability all along I don’t think you would have seen this somewhat sinusoidal graph with a sharply downward longtime trend for prices.
Moore’s law applies to all integrated circuits. You will find the inverse graph in this Wikipedia page.
Did you mean to reply to me or someone else?
There’s already investigations and evidence that they are indeed price fixing, just check the Gamer’s Nexus video on it.
I just saw some of the video. Refers to a class action lawsuit and quotes from it heavily. The class action seems to not be alleging price fixing per se (meeting in a smoky room and determining price) but rather than they are colluding to all cut DRAM supply and profit from the price spiking since the demand is unchanged. Even to the point of forgoing profits.
It doesn’t seem all that convincing though so I don’t think it will go anywhere. Something similar was tried a couple years back that was shot down by the courts. It’s not illegal for competitors in the market to behave similarly if they consider it in their rational interest to do so, it’s only illegal if they are cutting a secret deal for it so you have to have some good quality “plus factors” to convince the courts that some shady deal is going on. If there are reasonable alternatives to explain the behavior other than collusion then your case is kind of cooked.
It’s easier if they have slack production that’s being left idle to point to (which still didn’t work earlier) but now they’re all trying to churn out as much HBM as possible for insatiable data center demand and are building new fabrication plants. The video said as one example that they have better margins on DRAM than HBM but while that may be true in the current state where everyone and their mom is focusing on HBM, one question that could be posed is would that remain the same if one of the major companies swapped focus? Like one of the three biggest gives up on chasing the AI money and stops making as much HBM to prioritize DRAM. That would cut the supply for the former and boost that for the latter, which would send prices up in what they just abandoned while crashing the prices into what they’re re-entering. They could secure a lot of market share in DRAM but that could be considered to be a sucker’s bet to sacrifice the foothold in HBM and enormous stacks of AI cash in exchange for cornering the market on an older technology. Also they are reaching agreements to make HBM at longer prices but for a guaranteed period of time which makes their margins on HBM weaker but also gives them confidence that they’ll be getting that smaller amount of money for sure even if we get an AI bust.