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> They're not selling off the business, they're totally exiting it. From what I understand, OpenAI just bought out a significant proportion of the capacity of
by AnthonyMouse 11mo ago
> They're not selling off the business, they're totally exiting it.
From what I understand, OpenAI just bought out a significant proportion of the capacity of Samsung and Hynix, which is the big reason prices just spiked. They're two of the three DRAM manufacturers, Micron being the third.
That gives us a good idea as to what Micron is doing here: They have contracts with their other customers to supply DRAM at whatever price they previously negotiated, but now prices are higher, and they don't have to honor supply contracts with Crucial because they own it. So they're taking all the supply that would have gone to Crucial and selling it to the high bidder instead.
Spinning off the brand in that context doesn't work, because then "Crucial" would need to come with supply contracts or they'd have no access to supply and have nothing to sell. Moreover, the supply constraint isn't likely to be permanent, and whenever prices come back down then Micron would still own the brand and could start selling under it again, which they couldn't if they sold it.
- ethbr1 11mo ago> Moreover, the supply constraint isn't likely to be permanent, and whenever prices come back down then Micron would still own the brand and could start selling under it again, which they couldn't if they sold it. Why not just announce limited supply, then, instead of exiting? This seems like a "automaker invests more in financing arm, because it's the most profitable" concentration mistake, towards an industry with wide concerns over intermediate term financial sustainability.
- poloniculmov 11mo agoThey can spin it back up once the bubble pops.
- mdnahas 11mo agoThe announcement doesn’t say that they’re selling the Crucial brand. And it’s a valuable brand. So, I agree, they will wait for the bubble to pop and then start it back up. I assume the higher prices let them keep the operation around in mothballs and the employees working elsewhere in the company.
- AnthonyMouse 11mo ago> Why not just announce limited supply, then, instead of exiting? Because it would be a lie. The amount of supply they're planning to allocate to Crucial in the near future is zero. Keeping the website up as a place you can go and order nothing would only mislead people into thinking they should come back in a few days when they're restocked, when that isn't going to happen anytime soon. > This seems like a "automaker invests more in financing arm, because it's the most profitable" concentration mistake, towards an industry with wide concerns over intermediate term financial sustainability. Their business is manufacturing DRAM. Also selling it at retail makes sense most of the time because they get the retailer's margin too, but it doesn't right now, and that's the side business.