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The larger context here is this all takes place in the context of a DRAM market where prices have increased roughly 200% over the last 2 years (the same 16GB DD

by paulmd 8y ago

The larger context here is this all takes place in the context of a DRAM market where prices have increased roughly 200% over the last 2 years (the same 16GB DDR4-3000 kits I paid $63 for 16 GB for in May 2016 are now $171). Meanwhile, Hynix, Samsung, and Micron are all planning to reduce capacity relative to projected growth of demand. The DRAM cartel is very clearly back into action and China isn't going to sit by and let their electronics industry be strangled by these massive price increases. Over the last 6 months (before the Trump stuff even started) their anti-trust regulator has been having some pointed words with the DRAM fabs, backstopped by bringing their own domestic production online. Samsung, for one, is playing ball, and signed a memorandum of understanding with China's antitrust regulators. Taking the DRAM cartel down a peg is a good thing for consumers, a good thing for downstream electronics manufacturers (phones/laptops/etc), and a bad thing if your name is "Samsung", "Micron", or "Hynix". http://www.china.org.cn/business/2017-12/23/content_50157479.htm http://www.china.org.cn/business/2017-12/23/content_50157479... https://www.theregister.co.uk/2017/12/21/china_memory_insource/ https://www.theregister.co.uk/2017/12/21/china_memory_insour... https://www.reuters.com/article/us-samsung-elec-chips-outlook-analysis/end-of-a-chip-boom-memory-chip-price-drop-spooks-investors-idUSKBN1F406U https://www.reuters.com/article/us-samsung-elec-chips-outloo... https://seekingalpha.com/news/3327772-samsung-headed-china-agreement-likely-ding-dram-prices https://seekingalpha.com/news/3327772-samsung-headed-china-a... https://www.extremetech.com/computing/270666-china-launches-investigation-of-dram-manufacturers https://www.extremetech.com/computing/270666-china-launches-... https://www.digitimes.com/news/a20180614PD212.html?mod=3&q=micron https://www.digitimes.com/news/a20180614PD212.html?mod=3&q=m... Now, are they going to be extra pointed about this with Micron considering Trump is starting a trade war? Absolutely, but this has been going on for a half year now.

tooltalk 8y ago
Sure, but you are also forgetting the fact the DRAM industry was in glut and they suffered huge loss leading up to the point. Was it Cartels intend to drive the price so low that they would be almost out of business too?
- kbenson 8y ago
  > the DRAM industry was in glut and they suffered huge loss leading up to the point. So what caused that glut? There are very few things that come to mind (if any) that I can think of that excuse price collusion in a market, which is what was claimed above.
  - tooltalk 8y ago
    What caused the glut was Samsung's massive expansion in the early 2010's. Samsung was trying to increase market share in DRAM and they pumped in billions in CAPEX to increase their manufacturing capacity. That not surprisingly drove down the prices of DRAM between late 2014 and 2016, which benefited consumers, but also huge loss for all DRAM makers. This also meant that they couldn't invest much into their future capacity which is why we have the kind of price surge that we now have. This is no brainer if you look at it as business cycle. It looks like all DRAM makers are increasing their output now, but probably not enough to bring down the price fast enough, as it takes years to ramp up production.
    - paulmd 8y ago
      > Samsung was trying to increase market share in DRAM and they pumped in billions in CAPEX to increase their manufacturing capacity. That's exactly how it's supposed to work. Every manufacturer is individually incentivized to increase supply to increase their own relative share of the market. Of course, it's collectively better for all of them to choke supply, which is how we get OPEC and the DRAM cartel. China's got a big electronics industry that needs DRAM for their products, so if Korea is going to choke supply then they're just going to start up their own fabs. And predictably, the DRAM cartel is now crying about the new kid on the block messing up their attempt to corner the market. > It looks like all DRAM makers are increasing their output now, but probably not enough to bring down the price fast enough, as it takes years to ramp up production. No, actually, they are contracting supply relative to projected demand. Demand is going up by 20.6%, supply is only going up by 5-7%. https://press.trendforce.com/press/20170920-2972.html https://press.trendforce.com/press/20170920-2972.html > This also meant that they couldn't invest much into their future capacity which is why we have the kind of price surge that we now have. This is no brainer if you look at it from business cycle point of view. Pretty sure they cut capex in 2016, which wouldn't have had an impact until like, this year. Are you saying that they cut capex and in a matter of months prices doubled? Yeah, doesn't seem correct to me. > Was it Cartels intend to drive the price so low that they would be almost out of business too? Samsung was "almost going out of business"? Bull fucking shit. Actual, literal, "won't someone think of the poor corporations just struggling to make ends meet". Just wow. Hynix, Samsung, and Micron are making bank.
deepnotderp 8y ago
Memory (and DRAM) has always been a feast and famine cycle. One of the reasons Intel pivoted away.

by paulmd 8y ago

tooltalk 8y ago

Sure, but you are also forgetting the fact the DRAM industry was in glut and they suffered huge loss leading up to the point. Was it Cartels intend to drive the price so low that they would be almost out of business too?

kbenson 8y ago
> the DRAM industry was in glut and they suffered huge loss leading up to the point. So what caused that glut? There are very few things that come to mind (if any) that I can think of that excuse price collusion in a market, which is what was claimed above.
- tooltalk 8y ago
  What caused the glut was Samsung's massive expansion in the early 2010's. Samsung was trying to increase market share in DRAM and they pumped in billions in CAPEX to increase their manufacturing capacity. That not surprisingly drove down the prices of DRAM between late 2014 and 2016, which benefited consumers, but also huge loss for all DRAM makers. This also meant that they couldn't invest much into their future capacity which is why we have the kind of price surge that we now have. This is no brainer if you look at it as business cycle. It looks like all DRAM makers are increasing their output now, but probably not enough to bring down the price fast enough, as it takes years to ramp up production.
  - paulmd 8y ago
    > Samsung was trying to increase market share in DRAM and they pumped in billions in CAPEX to increase their manufacturing capacity. That's exactly how it's supposed to work. Every manufacturer is individually incentivized to increase supply to increase their own relative share of the market. Of course, it's collectively better for all of them to choke supply, which is how we get OPEC and the DRAM cartel. China's got a big electronics industry that needs DRAM for their products, so if Korea is going to choke supply then they're just going to start up their own fabs. And predictably, the DRAM cartel is now crying about the new kid on the block messing up their attempt to corner the market. > It looks like all DRAM makers are increasing their output now, but probably not enough to bring down the price fast enough, as it takes years to ramp up production. No, actually, they are contracting supply relative to projected demand. Demand is going up by 20.6%, supply is only going up by 5-7%. https://press.trendforce.com/press/20170920-2972.html https://press.trendforce.com/press/20170920-2972.html > This also meant that they couldn't invest much into their future capacity which is why we have the kind of price surge that we now have. This is no brainer if you look at it from business cycle point of view. Pretty sure they cut capex in 2016, which wouldn't have had an impact until like, this year. Are you saying that they cut capex and in a matter of months prices doubled? Yeah, doesn't seem correct to me. > Was it Cartels intend to drive the price so low that they would be almost out of business too? Samsung was "almost going out of business"? Bull fucking shit. Actual, literal, "won't someone think of the poor corporations just struggling to make ends meet". Just wow. Hynix, Samsung, and Micron are making bank.

deepnotderp 8y ago

Memory (and DRAM) has always been a feast and famine cycle. One of the reasons Intel pivoted away.