11 ms·

Ok so Samsung, SK Hynix and Micron do not have the capacity to meet demand. Also, what little capacity they do have they are allocating to HBM over DRAM. Based

Ok so Samsung, SK Hynix and Micron do not have the capacity to meet demand. Also, what little capacity they do have they are allocating to HBM over DRAM. Based on my limited knowledge HBM can not be easily repurposed for consumer electronics. Translation: main street is cooked for the next 3-4 years. It doesn't stop there though. OpenAI is currently mired in a capital crunch. Their last round just about sucked all the dry powder out of the private markets. Folks are now starting to ask difficult questions about their burn rate and revenue. It is increasingly looking like they might not commit to the purchase order they made which kick-started this whole panic over RAM. Soo ... how sure are we that the memory makers themselves are not going to be the ones holding the bag?

mschuster91 6mo ago
> Soo ... how sure are we that the memory makers themselves are not going to be the ones holding the bag? We aren't. The remaining memory manufacturers fear getting caught in a "pork cycle" yet again - that is why there's only the three large ones left anyway.
- ahartmetz 6mo ago
  If they don't expand capacity much, the only negative consequences I foresee happening for them is that they might lose spending discipline, and that systems will be set up to make do with a little less memory. Apart from that, it's just very high profits followed by more or less regular profits.
  - XorNot 6mo ago
    They could wind up losing all their business to China though. China has memory makers who are creeping up through the stages of production maturity, and once they hit then there's no going back. If the existing makers can't meet supply such that Chinese exports get their foot in the door, they may find they never get ahead again due to volume - that domestic market is huge so they have scale, and the gaming market isn't going to care because they get anything at the moment, which is all you'll need for enterprise to say "are we really afraid of memory in this business?"
    - ahartmetz 6mo ago
      Good point, it's a risk but so far the Chinese competition isn't up to par and it's unclear whether they'll be able to exploit the current window of opportunity.
      - FooBarWidget 6mo ago
        You think this window is short? We've been dealing with this for years and years, and to me it seems more like incumbent manufacturers are too comfortable milking cash cows.
        ahartmetz 6mo ago
        This window of opportunity (very high RAM prices) opened about half a year ago.
        FooBarWidget 6mo ago
        That's only for normal RAM. I'm talking about broader aspect: HBM shortage and high prices have been around for longer, and Chinese manufacturers are also climbing up and expanding there.
    - mschuster91 6mo ago
      > If the existing makers can't meet supply such that Chinese exports get their foot in the door, they may find they never get ahead again due to volume The answer to that is government regulation. Ban anything Chinese or slap it with tariffs. That is what tariffs are intended for - not for the BS the current administration has done.
      - hgoel 6mo ago
        Good luck actually pulling that off, it'll just kneecap US/Western industry, just as the current tariff and war madness has helped drag the US economy into the gutter.
- twic 6mo ago
  Surely this can be solved with financial engineering. The memory makers build more capacity, but they finance it with something like floating-rate notes linked to an index of memory prices, or even catastrophe bonds or AT1s. Or more crudely, set up special purpose vehicles to build the extra capacity, and issue convertible bonds from those; if the memory market collapses, investors don't get paid, but they do get a memory factory.
moffkalast 6mo ago
Memory makers did get themselves into this situation by selling all wafers for empty promises and alienating everyone but OpenAI tbh. I do hope they end up holding the bag once again, cause after covid and the cartel thing they don't seem to ever learn their lesson on how to have the tiniest amount of integrity.
- gck1 6mo ago
  While we're giving away bags, I'd like HDD manufacturers to get some too.
- zeristor 6mo ago
  That wouldn’t help if another one goes bankrupt that’ll only make things worse.
  - moffkalast 6mo ago
    Sounds like they're too big to fail, maybe we should bail them out to reinforce that they will get rewarded for making bad decisions.
    - atq2119 6mo ago
      Permanent public ownership of (very large stakes in) these companies doesn't seem like such a bad idea anymore, does it? It's what we used to have for most of the 20th century at least in Europe.
      - renewiltord 6mo ago
        Yeah and exactly zero of those companies are European as a consequence. I think we won’t be taking Europe’s lead on this, thanks.
        hgoel 6mo ago
        How do you reconcile this capitalistic zeal with how opposed to honest capitalism these companies are?
kubb 6mo ago
I would expect that OpenAI gets as much money as they ask for for the next 10 years. There’s virtually infinite capital: if needed, more can be reallocated from the federal government (funded with debt), from public companies (funded with people’s retirement funds), from people’s pockets via wealth redistribution upwards, from offshore investment. They will be allowed to strangle any part of the supply chain they want.
- IshKebab 6mo ago
  Maybe if they had no competitors...
- SlinkyOnStairs 6mo ago
  I think you're massively overestimating how much money is really accessible here. The parent comment's right that all of the easily available VC & private equity investment is basically used up. OpenAI was struggling to sell $600M of private equity, the big multi-billion dollar investment packages had lots of conditions and non-cash in it. > more can be reallocated from the federal government (funded with debt) While this is the most reliable funding, it's still not very accessible. OpenAI is a money pit, and their demands are growing quickly. The US government has started a bunch of very expensive spending. If OpenAI were to require yearly bundles of it's recent "$120B" deal, that's 6% of the US' discretionary budget. 12.5% of the non-military discretionary budget. (And the military is going to ask for a lot more money this year) Even the idea of just issuing more debt is dubious because they're going to want to do that to pay for the wars that are rapidly spiralling out of control. None of this is saying that the US government can't or wouldn't pay for it, but it's non trivial and it's unclear how much Altman can threaten the US government "give me a trillion dollars or the economy explodes" without consequences. Further deficit-spending isn't without it's risks for the US government either. Interests rates are already creeping up, and a careless explosion of deficit may well trigger a debt crisis. > from public companies (funded with people’s retirement funds) This would be at great cost. OpenAI would need to open up about it's financial performance to go public itself. With it's CFO being put on what is effectively Administrative Leave for pushing against going public, we can assume the financials are so catastrophic an IPO might bomb and take the company down with it. Nobody's going to be investing privately in a company that has no public takers. Getting money through other companies is also running into limits. Big Tech has deep pockets but they've already started slowing down, switching to debt to finance AI investment, and similarly are increasingly pressured by their own shareholders to show results. > from people’s pockets via wealth redistribution upwards The practical mechanism of this is "AI companies raise their prices". That might also just crash the bubble if demand evaporates. For all the hype, the productivity benefit hasn't really shown up in economy-wide aggregates. The moment AI becomes "expensive", all the casual users will drop it. And the non-casual users are likely to follow. The idea of "AI tokens" as a job perk is cute, but exceedingly few are going to accept lower salary in order to use AI at their job. There's simply not much money to take out of people's pockets these days, with how high cost of living has gotten. > from offshore investment. This is a pretty good source of money. The wealthy Arabian oil states have very deep slush funds, extensively investing in AI to get ties to US businesses and in the hope of diversifying their resource economies. ... ... "Was". Was a good source of money.
Cthulhu_ 6mo ago
To add a more local hurdle as well, the Dutch power grid is at capacity and its managing company is now telling companies that planned to build a datacenter that they can't be connected to the grid until 2030, even though said companies already paid for and got guarantees about that connection. That is, memory capacity is reserved for datacenters yet to be built, but this will do weird things if said datacenter construction is postponed or cancelled altogether.
- consp 6mo ago
  That guarantee is not as much of a guarantee as stated in the media. You get a guarantee it will be planned at a certain time (as in looked at), not that it will be build. The cost of doing business is taking risks and mitigating them. There is a reason the nuclear plant in Borsele was build: an aluminium smelter. Maybe you should arrange for something similar as a datacenter (no politician will fall on a sword for that but you can try). The (original) power draw is about the same 80-100MW.
- AnthonyMouse 6mo ago
  > the Dutch power grid is at capacity and its managing company is now telling companies that planned to build a datacenter that they can't be connected to the grid until 2030, even though said companies already paid for and got guarantees about that connection. Are the Netherlands a large proportion of global datacenters?
  - estimator7292 6mo ago
    Is that relevant? The grid in every country is getting ridiculously stressed by datacenters.
    - AnthonyMouse 6mo ago
      What the grid looks like in different countries is very different. The Dutch power grid is already almost 50% renewables, which is an inconvenience for adding capacity because that's around where you have to start really dealing with storage in order to add more. In most other places the percentage is significantly less than that and then you can easily add more of the cheap-but-intermittent stuff because a cloudy day only requires you to make up a 10% shortfall instead of a 50% one, which existing hydro or natural gas plants can handle without new storage when there are more of them to begin with.
hsbauauvhabzb 6mo ago
The people who fucked over consumers are left holding the back that they sold us out over? Oh no!
- VladStanimir 6mo ago
  They won't be, prices are high because they are refusing to build capacity for demand that may evaporated by the time they are done. They are holding back and building only enough so when the bubble pops they will be fine.
  - DoctorOetker 6mo ago
    So the ML hate is weaponized in the form of memory demand collapse FUD, and the public at large has to pay through their nose for it... thanks party poopers!
    - VladStanimir 6mo ago
      I don't think its from the ML collapse FUD, its most likely from the multiple time's in the past when they overbuilt and it resulted in a memory oversupply and price collapses. The 1985–1988, 1993–1994, 1998–2002 and the post pandemic oversupply. These were all cases where shortages followed by over corrections caused oversupply, financial losses due to low prices and fewer surviving companies. I think they're taking their time and are cautiously adding more capacity in such a way that prices won't end up collapsing again. Regardless, the result is still that we the consumers have to pay more.
      - DoctorOetker 6mo ago
        its not like all the RAM is passing the same machine, they can gradually increase machines and observe the change in demand, and smoothly match it.
        AnthonyMouse 6mo ago
        If they gradually increase production capacity then prices stay high for 10+ years (or for as long as it takes for demand to crash) because a gradual increase in production takes that long for them to add enough capacity for current demand. If they add enough capacity to meet current demand quickly then if demand crashes they still have billions of dollars in loans used to build capacity for demand that no longer exists and then they go bankrupt. The biggest problem is predicting future demand, because it often declines quickly rather than gradually.
naveen99 6mo ago
But wouldn’t you rather hbm prices come down first ? Memory makers will be fine. There is practically infinite demand. Unless you get china style rationing of compute per person world wide. The real issue is everyone wanting to upgrade to hbm, ddr5, and nvme5 at the same time.
torginus 6mo ago
The Radeon VII came out in 2019 as a $700 consumer GPU with an 1TB/s HBM2 memory subsystem which is more than any consumer GPU you can get today, including the high-end ones afaik. At that point in time, there was a whole lineup of AMD GPUs with HBM going down into the midrange. If they could make this stuff and sell it to regular people a decade ago for very palatable prices, why do they come up with the idea that this is the technology of the gods, unaffordable by mere mortals?
- cco 6mo ago
  That card only had 16GB of memory; its memory bandwidth was 1TB/s.
  - imtringued 6mo ago
    You're saying this in a world where AMD's highest end consumer GPU in 2026 is also limited to 16 GB.
    - thehamkercat 6mo ago
      RX7900 XTX has 24GB
      - fl4regun 6mo ago
        this card is 4 years old, it's not on store shelves anymore.
        badsectoracula 6mo ago
        FWIW that depends on the stores you're looking at. There are three models from different manufacturers available here in a few shops. The prices are a bit ouchier than what i paid for mine around Christmas 2024 though (i got mine on a sale).
        throwawayffffas 6mo ago
        You can still get "new" ones on amazon in europe.
xbmcuser 6mo ago
I am betting the pendulum swings faster to the other side to excess capacity as all the construction lies of Altman fall through with financiers waking up the the fact they can't build the infrasctructure as fast nor make any profits on that infrastructure that will get built.
- trvz 6mo ago
  Those financiers can’t risk not being involved in a company with even just a slight potential for AGI.
  - Morromist 6mo ago
    What if it takes 100 years to get to AGI or we never achieve it? All bets on AGI will just fail over and over again for decades in that case. It seems a bit like saying financiers can't risk not being involved with Faster-than-light travel technology. Yeah, it would change everything if we got it, but betting that we'll get it soon over and over again is probably not going to get you a lot of money. We've been projecting both FTL and AGI as future possibilities for almost 100 years now. Do LLMs get us a lot closer to AGI? I think they get us a little closer and Moore's "law" making compute faster probably is a much bigger factor, but I think we're still a very very long ways away.
    - krastanov 6mo ago
      Who has been projecting FTL as a realistic technology ever? FTL is not possible according to the current laws of Physics, while AGI is at least not forbidden by them.
      - gtech1 6mo ago
        We don't even know what human consciousness is. We can't even answer if we have free will or not. And you are proposing that AGI..is what exactly ?
        6mo ago
Rekindle8090 6mo ago
This will result in demand destruction which will starve the enterprise which will starve the hyperscaler. theres no situation where people not being able to afford hardware for 4 years results in the bubble not popping
- fc417fc802 6mo ago
  I'd expect unaffordable hardware to drive demand for thin clients connected to cloud services which is something that had already been happening gradually prior to this.
quickthrowman 6mo ago
> Soo ... how sure are we that the memory makers themselves are not going to be the ones holding the bag? I hope they do, they did not have to agree to sell so much RAM to one customer. They’ve been caught colluding and price fixing more than once, I hope they take it in the shorts and new competitors arise or they go bankrupt and new management takes over the existing plants. Don’t put all your eggs in the one basket is how the old saying goes.
shevy-java 6mo ago
Good point. I think both AI companies and hardware makers should pay for the damage they caused to us here. They act as a de-facto monopoly and milk us. Why is this allowed?
- kennywinker 6mo ago
  Allowed? We live in a neoliberal world where corporate monopolies / oligopolies aren’t even remotely regulated. If you try to do even the gentlest regulation of companies people scream about communism and totalitarianism. Unless the regulation serves the monopolies by making it harder to enter the market. It started with raegan, and even parties on the “left” in the west believe in it with very few exceptions.
  - AnthonyMouse 6mo ago
    > We live in a neoliberal world where corporate monopolies / oligopolies aren’t even remotely regulated. If you try to do even the gentlest regulation of companies people scream about communism and totalitarianism. Unless the regulation serves the monopolies by making it harder to enter the market. The thing that enables this is pretty obvious. The population is divided into two camps, the first of which holds the heuristic that regulations are "communism and totalitarianism" and this camp is used to prevent e.g. antitrust rules/enforcement. The second camp holds the heuristic that companies need to be aggressively "regulated" and this camp is used to create/sustain rules making it harder to enter the market. The problem is that ordinary people don't have the resources to dive into the details of any given proposal but the companies do. So what we need is a simple heuristic for ordinary people to distinguish them: Make the majority of "regulations" apply only to companies with more than 20% market share. No one is allowed to dump industrial waste in the river but only dominant companies have bureaucratic reporting requirements etc. Allow private lawsuits against dominant companies for certain offenses but only government-initiated prosecutions against smaller ones, the latter preventing incumbents from miring new challengers in litigation and requiring proof beyond a reasonable doubt. This even makes logical sense, because most of the rules are attempts to mitigate an uncompetitive market, so applying them to new entrants or markets with >5 competitors is more likely to be deleterious, i.e. drive further consolidation. Whereas if the market is already consolidated then the thicket of rules constrains the incumbents from abusing their dominance in the uncompetitive market while encouraging new entrants who are below the threshold.
bombcar 6mo ago
Don’t the memory makers always get left holding the bag? I feel this has happened at least three times before.
- formerly_proven 6mo ago
  DRAM and to a lesser degree storage are notorious for their feast and famine cycles (Well that and collusion)
  - bombcar 6mo ago
    I don’t know if they realize that collusion lends itself to feast/famine.
    - bryanrasmussen 6mo ago
      but if you don't collude during times of feast you will have famine, and during times of famine you will have famine, in an economy based on feast/famine you must sometimes feast or die.
  - bluGill 6mo ago
    There are a lot of cyclical businesses that make money every year. It requires careful management. Factories can produce less than full capacity - but you better design for that. you can make money in the worst years without laying anyone off even - but it requires careful attention to details and not over hiring in good times as if they will never end.
    - Numerlor 6mo ago
      Factories working at (significantly) less than full capacity gets a bit harder when you've got one of the most expensive machines on earth working in them, and production lines that'll be out of date in a couple of years
    - adgjlsfhk1 6mo ago
      the normal way to do that is by hiring/firing to meet demand, but in the fab business, you have 10s of billions of dollars of capex with relatively little opex. if you're running at <90% capacity, you're losing money.
nostrademons 6mo ago
What kind of consumer electronics can you build with HBM? That's the startup you should be founding...
- nullsanity 6mo ago
  [dead]
- daemonologist 6mo ago
  AMD has built some consumer GPUs in the recent past with HBM - RX Vega and Radeon VII (although I assume not all "HBM" is created equal).
  - christkv 6mo ago
    My vega 56 still has 400gb/s of memory which is still insane for how old the card is.
    - zdw 6mo ago
      AMD's Hawaii architecture had 320GB/s on a 512b GDDR5 bus in 2013. The Fiji XT architecture after it had 512GB/S on a 4096b HBM bus in 2015. The Vega architecture did have 400GB/s or so in 2017, which was a bit of a downgrade.
  - hypercube33 6mo ago
    Isn't their APU also capable of doing HBM? There was an Intel AMD hybrid chip that used unified a while back too.
    - TiredOfLife 6mo ago
      That was not unified. It was just on same package. Functionally it was like if you had a dedicated gpu.
- CamperBob2 6mo ago
  HBM is just normal DDR RAM that's been packaged with (much) wider-than-usual data buses. That's where the high bandwidth comes from, not from high clock rates or any other innovation or improvement in core specifications. Very few applications other than GPUs need HBM.
elorant 6mo ago
The market is already stagnated. Even if OpenAI doesn’t buy what they reserved other players will do so. SK Hynix CEO said there is a 20% gap between supply and demand per year. And that doesn’t account the shock effect that will take place the moment prices normalize and everyone and their dog will go out and start buying inventory to avoid the next crisis. I for one would certainly buy more than I currently need just in case.
- fn-mote 6mo ago
  I think: s/stagnated/saturated/ Edit: also, that demand pressure is going to be applied constantly; there isn’t going to be a shock, it’s just going to keep prices high longer.
- ece 6mo ago
  The FOMO is strong, but can also indicate a bubble. Demand is from circular deals and APIs are being locked down already.
zozbot234 6mo ago
There's actually plenty of demand for LPDDR even in the AI datacenter, because HBM is quite wasteful of area for any given memory capacity.
- BeeOnRope 6mo ago
  Wafer area?
  - wmf 6mo ago
    Yes, HBM requires more wafer area for the TSVs and maybe some other features.
danishanish 6mo ago
I think I’m missing something. Financially, what bag would the memory makers be holding here? I don’t think I’m well informed regarding how these deals were structured.
- michaelbuckbee 6mo ago
  Memory makers make capital investements (build different factories, convert physical production lines, etc.) to meet orders that have been place for the next ~5 years. OpenAI (or whoever) crashes and can't pay for the order leaving the memory makers in a tough spot.
  - justsomehnguy 6mo ago
    > leaving the memory makers in a tough spot Oh noes! Think of a poor memory makers! The amount of money flowing both from the AI bubble and from quite literally scalping both the server and consumer market... They gambled on the opportunity and if they fail - it's their problem.
    - 0-_-0 6mo ago
      Exactly, that's why they are not building more capacity and that's why RAM prices will stay up for years.
      - justsomehnguy 6mo ago
        And how is that a problem and more importantly how's that a problem of Average Joe? Capitalists did their gamble things. If they fail in that gamble what forbids them to sell the regular RAM they made for AI bubbleists to the regular consumers? Besides HBM it's just the regular chips which are exactly the same for the consumer/server market, why it would be any different?
Macha 6mo ago
> Soo ... how sure are we that the memory makers themselves are not going to be the ones holding the bag? The memory makers specifically did not scale up capacity to avoid being left holding the bag.
eldenring 6mo ago
> Folks are now starting to ask difficult questions about their burn rate and revenue. this view isn't updated correctly post-claude code and codex. there will clearly be sufficient demand.
- philistine 6mo ago
  Seriously? One release is all it took to turn the whole ship around?
metalcrow 6mo ago
Do the memory makers not have a contract in place for an order this large? I assume that they aren't going to take "trust us bro" as good enough for several million dollars in orders, and even if there is a way to cancel the order it won't be free. I would assume so at least, but i would like if anyone knew for certain.
- sebmellen 6mo ago
  * several Billion dollars in orders.
- aidenn0 6mo ago
  I was interning at a company that made networking gear that was put out of business when their largest customer canceled an order within a week of the delivery date. The customer ran out of money. In terms of where you are in line of debtors when you haven't even delivered the product to a customer, it's so far back as to be assured you won't get your money. If the memory makers got a deposit from OpenAI as part of this deal, that is likely to be the only money they will get for any undelivered memory, particularly if OpenAI runs out of capital.
- wmf 6mo ago
  Instead of canceling the orders, OpenAI could take delivery and immediately flip the DRAM for a profit.
  - atwrk 6mo ago
    That would also be a pretty obvious admission of defeat for their original business model, though...
- BenFranklin100 6mo ago
  You can’t squeeze blood from a stone as they say. If AI companies go bankrupt there’s no money to be had.
zamalek 6mo ago
Not a rec, but just my source: Atrioc (streamer, YouTuber) is good at gathering all the facts for the rest of us. There's many other things in play, like the Strait of Hormuz (helium, bromine). Ultimately it works out that the shortage, and shortage profits, will continue; the chip makers are probably going to continue to see record profits (as Samsung has). The specific mix of factors could change at any time, but the supply chain is relatively inelastic, it will take some time to show up on price labels.
diego_sandoval 6mo ago
Did OpenAI's order actually kickstart the "panic" over RAM? Are they really such a big RAM buyer?
- c22 6mo ago
  Apparently... > OpenAI’s rapid growth, fueled by the success of ChatGPT and other AI products, led to a landmark agreement in October to purchase 900,000 DRAM wafers per month from Samsung and SK Hynix—amounting to roughly 40% of global supply. This surge in demand, coupled with limited manufacturing capacity, sent prices for memory kits skyrocketing. [0] [0]: https://peq42.com/blog/openai-canceling-many-large-purchase-orders-ram-price-is-dropping/ https://peq42.com/blog/openai-canceling-many-large-purchase-...
- onion2k 6mo ago
  They ordered 40% of the global RAM production for 2025/26. It was a non-binding agreement that either side could easily withdraw from but they're essentially trying to buy about half of all the RAM.
  - kdheiwns 6mo ago
    Blows my mind that it's non-binding. If I booked half a hotel's rooms then suddenly said "yeah never mind. Half my friends cancelled and we're not staying", basically any hotel would be coming at me for my money because there's no way they can fill their rooms now and they're losing revenue. But OpenAI can really get the whole world to pivot towards it then say "cool but we don't need your product anymore" and RAM makers are just going to let it go. Whoever decided that was a good idea needs to be fired and publicly shamed.
    - Catagris 6mo ago
      Well if that hotel was then able to sell the other half of hotel rooms for 10x the old price. Then the hotel might actually be happy as they can now charge 10x for the other half or slowly lower prices back down over years.
    - 6mo ago
pseudohadamard 6mo ago
It's not going to last until 2028, it'll last until 'min(AI_bubble_burst, 2028)', which I expect will be a lot smaller than just '2028'. So the real question is, how long will it take to retool for non-HBM, and will there be a fire sale as they scramble to recover? Which also explains why production is falling behind demand, companies aren't going to sink billions into creating product for a market that could dry up overnight.
PunchyHamster 6mo ago
> Based on my limited knowledge HBM can not be easily repurposed for consumer electronics. Translation: main street is cooked for the next 3-4 years. It's worse. HBM have lower yields so they are essentially making less GB per wafer too
Se_ba 6mo ago
not all DRAM capacity can switch to HBM quickly. That lag is where volatility comes from
dpoloncsak 6mo ago
I'm under the impression OAI wrote Letters of Intent, and are not actually on the hook for the RAM they requested. The others...they did not. Memory makers won't be holding the bag because Apple/Google/Samsung are contractually obligated to purchase, after the panic OAI caused.

mschuster91 6mo ago

> Soo ... how sure are we that the memory makers themselves are not going to be the ones holding the bag? We aren't. The remaining memory manufacturers fear getting caught in a "pork cycle" yet again - that is why there's only the three large ones left anyway.

ahartmetz 6mo ago
If they don't expand capacity much, the only negative consequences I foresee happening for them is that they might lose spending discipline, and that systems will be set up to make do with a little less memory. Apart from that, it's just very high profits followed by more or less regular profits.
- XorNot 6mo ago
  They could wind up losing all their business to China though. China has memory makers who are creeping up through the stages of production maturity, and once they hit then there's no going back. If the existing makers can't meet supply such that Chinese exports get their foot in the door, they may find they never get ahead again due to volume - that domestic market is huge so they have scale, and the gaming market isn't going to care because they get anything at the moment, which is all you'll need for enterprise to say "are we really afraid of memory in this business?"
  - ahartmetz 6mo ago
    Good point, it's a risk but so far the Chinese competition isn't up to par and it's unclear whether they'll be able to exploit the current window of opportunity.
    - FooBarWidget 6mo ago
      You think this window is short? We've been dealing with this for years and years, and to me it seems more like incumbent manufacturers are too comfortable milking cash cows.
      - ahartmetz 6mo ago
        This window of opportunity (very high RAM prices) opened about half a year ago.
        FooBarWidget 6mo ago
        That's only for normal RAM. I'm talking about broader aspect: HBM shortage and high prices have been around for longer, and Chinese manufacturers are also climbing up and expanding there.
  - mschuster91 6mo ago
    > If the existing makers can't meet supply such that Chinese exports get their foot in the door, they may find they never get ahead again due to volume The answer to that is government regulation. Ban anything Chinese or slap it with tariffs. That is what tariffs are intended for - not for the BS the current administration has done.
    - hgoel 6mo ago
      Good luck actually pulling that off, it'll just kneecap US/Western industry, just as the current tariff and war madness has helped drag the US economy into the gutter.
twic 6mo ago
Surely this can be solved with financial engineering. The memory makers build more capacity, but they finance it with something like floating-rate notes linked to an index of memory prices, or even catastrophe bonds or AT1s. Or more crudely, set up special purpose vehicles to build the extra capacity, and issue convertible bonds from those; if the memory market collapses, investors don't get paid, but they do get a memory factory.

moffkalast 6mo ago

Memory makers did get themselves into this situation by selling all wafers for empty promises and alienating everyone but OpenAI tbh. I do hope they end up holding the bag once again, cause after covid and the cartel thing they don't seem to ever learn their lesson on how to have the tiniest amount of integrity.

gck1 6mo ago
While we're giving away bags, I'd like HDD manufacturers to get some too.
zeristor 6mo ago
That wouldn’t help if another one goes bankrupt that’ll only make things worse.
- moffkalast 6mo ago
  Sounds like they're too big to fail, maybe we should bail them out to reinforce that they will get rewarded for making bad decisions.
  - atq2119 6mo ago
    Permanent public ownership of (very large stakes in) these companies doesn't seem like such a bad idea anymore, does it? It's what we used to have for most of the 20th century at least in Europe.
    - renewiltord 6mo ago
      Yeah and exactly zero of those companies are European as a consequence. I think we won’t be taking Europe’s lead on this, thanks.
      - hgoel 6mo ago
        How do you reconcile this capitalistic zeal with how opposed to honest capitalism these companies are?

kubb 6mo ago

I would expect that OpenAI gets as much money as they ask for for the next 10 years. There’s virtually infinite capital: if needed, more can be reallocated from the federal government (funded with debt), from public companies (funded with people’s retirement funds), from people’s pockets via wealth redistribution upwards, from offshore investment. They will be allowed to strangle any part of the supply chain they want.

IshKebab 6mo ago
Maybe if they had no competitors...
SlinkyOnStairs 6mo ago
I think you're massively overestimating how much money is really accessible here. The parent comment's right that all of the easily available VC & private equity investment is basically used up. OpenAI was struggling to sell $600M of private equity, the big multi-billion dollar investment packages had lots of conditions and non-cash in it. > more can be reallocated from the federal government (funded with debt) While this is the most reliable funding, it's still not very accessible. OpenAI is a money pit, and their demands are growing quickly. The US government has started a bunch of very expensive spending. If OpenAI were to require yearly bundles of it's recent "$120B" deal, that's 6% of the US' discretionary budget. 12.5% of the non-military discretionary budget. (And the military is going to ask for a lot more money this year) Even the idea of just issuing more debt is dubious because they're going to want to do that to pay for the wars that are rapidly spiralling out of control. None of this is saying that the US government can't or wouldn't pay for it, but it's non trivial and it's unclear how much Altman can threaten the US government "give me a trillion dollars or the economy explodes" without consequences. Further deficit-spending isn't without it's risks for the US government either. Interests rates are already creeping up, and a careless explosion of deficit may well trigger a debt crisis. > from public companies (funded with people’s retirement funds) This would be at great cost. OpenAI would need to open up about it's financial performance to go public itself. With it's CFO being put on what is effectively Administrative Leave for pushing against going public, we can assume the financials are so catastrophic an IPO might bomb and take the company down with it. Nobody's going to be investing privately in a company that has no public takers. Getting money through other companies is also running into limits. Big Tech has deep pockets but they've already started slowing down, switching to debt to finance AI investment, and similarly are increasingly pressured by their own shareholders to show results. > from people’s pockets via wealth redistribution upwards The practical mechanism of this is "AI companies raise their prices". That might also just crash the bubble if demand evaporates. For all the hype, the productivity benefit hasn't really shown up in economy-wide aggregates. The moment AI becomes "expensive", all the casual users will drop it. And the non-casual users are likely to follow. The idea of "AI tokens" as a job perk is cute, but exceedingly few are going to accept lower salary in order to use AI at their job. There's simply not much money to take out of people's pockets these days, with how high cost of living has gotten. > from offshore investment. This is a pretty good source of money. The wealthy Arabian oil states have very deep slush funds, extensively investing in AI to get ties to US businesses and in the hope of diversifying their resource economies. ... ... "Was". Was a good source of money.

Cthulhu_ 6mo ago

To add a more local hurdle as well, the Dutch power grid is at capacity and its managing company is now telling companies that planned to build a datacenter that they can't be connected to the grid until 2030, even though said companies already paid for and got guarantees about that connection. That is, memory capacity is reserved for datacenters yet to be built, but this will do weird things if said datacenter construction is postponed or cancelled altogether.

consp 6mo ago
That guarantee is not as much of a guarantee as stated in the media. You get a guarantee it will be planned at a certain time (as in looked at), not that it will be build. The cost of doing business is taking risks and mitigating them. There is a reason the nuclear plant in Borsele was build: an aluminium smelter. Maybe you should arrange for something similar as a datacenter (no politician will fall on a sword for that but you can try). The (original) power draw is about the same 80-100MW.
AnthonyMouse 6mo ago
> the Dutch power grid is at capacity and its managing company is now telling companies that planned to build a datacenter that they can't be connected to the grid until 2030, even though said companies already paid for and got guarantees about that connection. Are the Netherlands a large proportion of global datacenters?
- estimator7292 6mo ago
  Is that relevant? The grid in every country is getting ridiculously stressed by datacenters.
  - AnthonyMouse 6mo ago
    What the grid looks like in different countries is very different. The Dutch power grid is already almost 50% renewables, which is an inconvenience for adding capacity because that's around where you have to start really dealing with storage in order to add more. In most other places the percentage is significantly less than that and then you can easily add more of the cheap-but-intermittent stuff because a cloudy day only requires you to make up a 10% shortfall instead of a 50% one, which existing hydro or natural gas plants can handle without new storage when there are more of them to begin with.

hsbauauvhabzb 6mo ago

The people who fucked over consumers are left holding the back that they sold us out over? Oh no!

VladStanimir 6mo ago
They won't be, prices are high because they are refusing to build capacity for demand that may evaporated by the time they are done. They are holding back and building only enough so when the bubble pops they will be fine.
- DoctorOetker 6mo ago
  So the ML hate is weaponized in the form of memory demand collapse FUD, and the public at large has to pay through their nose for it... thanks party poopers!
  - VladStanimir 6mo ago
    I don't think its from the ML collapse FUD, its most likely from the multiple time's in the past when they overbuilt and it resulted in a memory oversupply and price collapses. The 1985–1988, 1993–1994, 1998–2002 and the post pandemic oversupply. These were all cases where shortages followed by over corrections caused oversupply, financial losses due to low prices and fewer surviving companies. I think they're taking their time and are cautiously adding more capacity in such a way that prices won't end up collapsing again. Regardless, the result is still that we the consumers have to pay more.
    - DoctorOetker 6mo ago
      its not like all the RAM is passing the same machine, they can gradually increase machines and observe the change in demand, and smoothly match it.
      - AnthonyMouse 6mo ago
        If they gradually increase production capacity then prices stay high for 10+ years (or for as long as it takes for demand to crash) because a gradual increase in production takes that long for them to add enough capacity for current demand. If they add enough capacity to meet current demand quickly then if demand crashes they still have billions of dollars in loans used to build capacity for demand that no longer exists and then they go bankrupt. The biggest problem is predicting future demand, because it often declines quickly rather than gradually.

naveen99 6mo ago

But wouldn’t you rather hbm prices come down first ? Memory makers will be fine. There is practically infinite demand. Unless you get china style rationing of compute per person world wide. The real issue is everyone wanting to upgrade to hbm, ddr5, and nvme5 at the same time.

torginus 6mo ago

The Radeon VII came out in 2019 as a $700 consumer GPU with an 1TB/s HBM2 memory subsystem which is more than any consumer GPU you can get today, including the high-end ones afaik. At that point in time, there was a whole lineup of AMD GPUs with HBM going down into the midrange. If they could make this stuff and sell it to regular people a decade ago for very palatable prices, why do they come up with the idea that this is the technology of the gods, unaffordable by mere mortals?

cco 6mo ago
That card only had 16GB of memory; its memory bandwidth was 1TB/s.
- imtringued 6mo ago
  You're saying this in a world where AMD's highest end consumer GPU in 2026 is also limited to 16 GB.
  - thehamkercat 6mo ago
    RX7900 XTX has 24GB
    - fl4regun 6mo ago
      this card is 4 years old, it's not on store shelves anymore.
      - badsectoracula 6mo ago
        FWIW that depends on the stores you're looking at. There are three models from different manufacturers available here in a few shops. The prices are a bit ouchier than what i paid for mine around Christmas 2024 though (i got mine on a sale).
      - throwawayffffas 6mo ago
        You can still get "new" ones on amazon in europe.

xbmcuser 6mo ago

I am betting the pendulum swings faster to the other side to excess capacity as all the construction lies of Altman fall through with financiers waking up the the fact they can't build the infrasctructure as fast nor make any profits on that infrastructure that will get built.

trvz 6mo ago
Those financiers can’t risk not being involved in a company with even just a slight potential for AGI.
- Morromist 6mo ago
  What if it takes 100 years to get to AGI or we never achieve it? All bets on AGI will just fail over and over again for decades in that case. It seems a bit like saying financiers can't risk not being involved with Faster-than-light travel technology. Yeah, it would change everything if we got it, but betting that we'll get it soon over and over again is probably not going to get you a lot of money. We've been projecting both FTL and AGI as future possibilities for almost 100 years now. Do LLMs get us a lot closer to AGI? I think they get us a little closer and Moore's "law" making compute faster probably is a much bigger factor, but I think we're still a very very long ways away.
  - krastanov 6mo ago
    Who has been projecting FTL as a realistic technology ever? FTL is not possible according to the current laws of Physics, while AGI is at least not forbidden by them.
    - gtech1 6mo ago
      We don't even know what human consciousness is. We can't even answer if we have free will or not. And you are proposing that AGI..is what exactly ?
      - 6mo ago

Rekindle8090 6mo ago

This will result in demand destruction which will starve the enterprise which will starve the hyperscaler. theres no situation where people not being able to afford hardware for 4 years results in the bubble not popping

fc417fc802 6mo ago
I'd expect unaffordable hardware to drive demand for thin clients connected to cloud services which is something that had already been happening gradually prior to this.

quickthrowman 6mo ago

> Soo ... how sure are we that the memory makers themselves are not going to be the ones holding the bag? I hope they do, they did not have to agree to sell so much RAM to one customer. They’ve been caught colluding and price fixing more than once, I hope they take it in the shorts and new competitors arise or they go bankrupt and new management takes over the existing plants. Don’t put all your eggs in the one basket is how the old saying goes.

shevy-java 6mo ago

Good point. I think both AI companies and hardware makers should pay for the damage they caused to us here. They act as a de-facto monopoly and milk us. Why is this allowed?

kennywinker 6mo ago
Allowed? We live in a neoliberal world where corporate monopolies / oligopolies aren’t even remotely regulated. If you try to do even the gentlest regulation of companies people scream about communism and totalitarianism. Unless the regulation serves the monopolies by making it harder to enter the market. It started with raegan, and even parties on the “left” in the west believe in it with very few exceptions.
- AnthonyMouse 6mo ago
  > We live in a neoliberal world where corporate monopolies / oligopolies aren’t even remotely regulated. If you try to do even the gentlest regulation of companies people scream about communism and totalitarianism. Unless the regulation serves the monopolies by making it harder to enter the market. The thing that enables this is pretty obvious. The population is divided into two camps, the first of which holds the heuristic that regulations are "communism and totalitarianism" and this camp is used to prevent e.g. antitrust rules/enforcement. The second camp holds the heuristic that companies need to be aggressively "regulated" and this camp is used to create/sustain rules making it harder to enter the market. The problem is that ordinary people don't have the resources to dive into the details of any given proposal but the companies do. So what we need is a simple heuristic for ordinary people to distinguish them: Make the majority of "regulations" apply only to companies with more than 20% market share. No one is allowed to dump industrial waste in the river but only dominant companies have bureaucratic reporting requirements etc. Allow private lawsuits against dominant companies for certain offenses but only government-initiated prosecutions against smaller ones, the latter preventing incumbents from miring new challengers in litigation and requiring proof beyond a reasonable doubt. This even makes logical sense, because most of the rules are attempts to mitigate an uncompetitive market, so applying them to new entrants or markets with >5 competitors is more likely to be deleterious, i.e. drive further consolidation. Whereas if the market is already consolidated then the thicket of rules constrains the incumbents from abusing their dominance in the uncompetitive market while encouraging new entrants who are below the threshold.

bombcar 6mo ago

Don’t the memory makers always get left holding the bag? I feel this has happened at least three times before.

formerly_proven 6mo ago
DRAM and to a lesser degree storage are notorious for their feast and famine cycles (Well that and collusion)
- bombcar 6mo ago
  I don’t know if they realize that collusion lends itself to feast/famine.
  - bryanrasmussen 6mo ago
    but if you don't collude during times of feast you will have famine, and during times of famine you will have famine, in an economy based on feast/famine you must sometimes feast or die.
- bluGill 6mo ago
  There are a lot of cyclical businesses that make money every year. It requires careful management. Factories can produce less than full capacity - but you better design for that. you can make money in the worst years without laying anyone off even - but it requires careful attention to details and not over hiring in good times as if they will never end.
  - Numerlor 6mo ago
    Factories working at (significantly) less than full capacity gets a bit harder when you've got one of the most expensive machines on earth working in them, and production lines that'll be out of date in a couple of years
  - adgjlsfhk1 6mo ago
    the normal way to do that is by hiring/firing to meet demand, but in the fab business, you have 10s of billions of dollars of capex with relatively little opex. if you're running at <90% capacity, you're losing money.

nostrademons 6mo ago

What kind of consumer electronics can you build with HBM? That's the startup you should be founding...

nullsanity 6mo ago
[dead]
daemonologist 6mo ago
AMD has built some consumer GPUs in the recent past with HBM - RX Vega and Radeon VII (although I assume not all "HBM" is created equal).
- christkv 6mo ago
  My vega 56 still has 400gb/s of memory which is still insane for how old the card is.
  - zdw 6mo ago
    AMD's Hawaii architecture had 320GB/s on a 512b GDDR5 bus in 2013. The Fiji XT architecture after it had 512GB/S on a 4096b HBM bus in 2015. The Vega architecture did have 400GB/s or so in 2017, which was a bit of a downgrade.
- hypercube33 6mo ago
  Isn't their APU also capable of doing HBM? There was an Intel AMD hybrid chip that used unified a while back too.
  - TiredOfLife 6mo ago
    That was not unified. It was just on same package. Functionally it was like if you had a dedicated gpu.
CamperBob2 6mo ago
HBM is just normal DDR RAM that's been packaged with (much) wider-than-usual data buses. That's where the high bandwidth comes from, not from high clock rates or any other innovation or improvement in core specifications. Very few applications other than GPUs need HBM.

elorant 6mo ago

The market is already stagnated. Even if OpenAI doesn’t buy what they reserved other players will do so. SK Hynix CEO said there is a 20% gap between supply and demand per year. And that doesn’t account the shock effect that will take place the moment prices normalize and everyone and their dog will go out and start buying inventory to avoid the next crisis. I for one would certainly buy more than I currently need just in case.

fn-mote 6mo ago
I think: s/stagnated/saturated/ Edit: also, that demand pressure is going to be applied constantly; there isn’t going to be a shock, it’s just going to keep prices high longer.
ece 6mo ago
The FOMO is strong, but can also indicate a bubble. Demand is from circular deals and APIs are being locked down already.

zozbot234 6mo ago

There's actually plenty of demand for LPDDR even in the AI datacenter, because HBM is quite wasteful of area for any given memory capacity.

BeeOnRope 6mo ago
Wafer area?
- wmf 6mo ago
  Yes, HBM requires more wafer area for the TSVs and maybe some other features.

danishanish 6mo ago

I think I’m missing something. Financially, what bag would the memory makers be holding here? I don’t think I’m well informed regarding how these deals were structured.

michaelbuckbee 6mo ago
Memory makers make capital investements (build different factories, convert physical production lines, etc.) to meet orders that have been place for the next ~5 years. OpenAI (or whoever) crashes and can't pay for the order leaving the memory makers in a tough spot.
- justsomehnguy 6mo ago
  > leaving the memory makers in a tough spot Oh noes! Think of a poor memory makers! The amount of money flowing both from the AI bubble and from quite literally scalping both the server and consumer market... They gambled on the opportunity and if they fail - it's their problem.
  - 0-_-0 6mo ago
    Exactly, that's why they are not building more capacity and that's why RAM prices will stay up for years.
    - justsomehnguy 6mo ago
      And how is that a problem and more importantly how's that a problem of Average Joe? Capitalists did their gamble things. If they fail in that gamble what forbids them to sell the regular RAM they made for AI bubbleists to the regular consumers? Besides HBM it's just the regular chips which are exactly the same for the consumer/server market, why it would be any different?

Macha 6mo ago

> Soo ... how sure are we that the memory makers themselves are not going to be the ones holding the bag? The memory makers specifically did not scale up capacity to avoid being left holding the bag.

eldenring 6mo ago

> Folks are now starting to ask difficult questions about their burn rate and revenue. this view isn't updated correctly post-claude code and codex. there will clearly be sufficient demand.

philistine 6mo ago
Seriously? One release is all it took to turn the whole ship around?

metalcrow 6mo ago

Do the memory makers not have a contract in place for an order this large? I assume that they aren't going to take "trust us bro" as good enough for several million dollars in orders, and even if there is a way to cancel the order it won't be free. I would assume so at least, but i would like if anyone knew for certain.

sebmellen 6mo ago
* several Billion dollars in orders.
aidenn0 6mo ago
I was interning at a company that made networking gear that was put out of business when their largest customer canceled an order within a week of the delivery date. The customer ran out of money. In terms of where you are in line of debtors when you haven't even delivered the product to a customer, it's so far back as to be assured you won't get your money. If the memory makers got a deposit from OpenAI as part of this deal, that is likely to be the only money they will get for any undelivered memory, particularly if OpenAI runs out of capital.
wmf 6mo ago
Instead of canceling the orders, OpenAI could take delivery and immediately flip the DRAM for a profit.
- atwrk 6mo ago
  That would also be a pretty obvious admission of defeat for their original business model, though...
BenFranklin100 6mo ago
You can’t squeeze blood from a stone as they say. If AI companies go bankrupt there’s no money to be had.

zamalek 6mo ago

Not a rec, but just my source: Atrioc (streamer, YouTuber) is good at gathering all the facts for the rest of us. There's many other things in play, like the Strait of Hormuz (helium, bromine). Ultimately it works out that the shortage, and shortage profits, will continue; the chip makers are probably going to continue to see record profits (as Samsung has). The specific mix of factors could change at any time, but the supply chain is relatively inelastic, it will take some time to show up on price labels.

diego_sandoval 6mo ago

Did OpenAI's order actually kickstart the "panic" over RAM? Are they really such a big RAM buyer?

c22 6mo ago
Apparently... > OpenAI’s rapid growth, fueled by the success of ChatGPT and other AI products, led to a landmark agreement in October to purchase 900,000 DRAM wafers per month from Samsung and SK Hynix—amounting to roughly 40% of global supply. This surge in demand, coupled with limited manufacturing capacity, sent prices for memory kits skyrocketing. [0] [0]: https://peq42.com/blog/openai-canceling-many-large-purchase-orders-ram-price-is-dropping/ https://peq42.com/blog/openai-canceling-many-large-purchase-...
onion2k 6mo ago
They ordered 40% of the global RAM production for 2025/26. It was a non-binding agreement that either side could easily withdraw from but they're essentially trying to buy about half of all the RAM.
- kdheiwns 6mo ago
  Blows my mind that it's non-binding. If I booked half a hotel's rooms then suddenly said "yeah never mind. Half my friends cancelled and we're not staying", basically any hotel would be coming at me for my money because there's no way they can fill their rooms now and they're losing revenue. But OpenAI can really get the whole world to pivot towards it then say "cool but we don't need your product anymore" and RAM makers are just going to let it go. Whoever decided that was a good idea needs to be fired and publicly shamed.
  - Catagris 6mo ago
    Well if that hotel was then able to sell the other half of hotel rooms for 10x the old price. Then the hotel might actually be happy as they can now charge 10x for the other half or slowly lower prices back down over years.
  - 6mo ago

pseudohadamard 6mo ago

It's not going to last until 2028, it'll last until 'min(AI_bubble_burst, 2028)', which I expect will be a lot smaller than just '2028'. So the real question is, how long will it take to retool for non-HBM, and will there be a fire sale as they scramble to recover? Which also explains why production is falling behind demand, companies aren't going to sink billions into creating product for a market that could dry up overnight.

PunchyHamster 6mo ago

> Based on my limited knowledge HBM can not be easily repurposed for consumer electronics. Translation: main street is cooked for the next 3-4 years. It's worse. HBM have lower yields so they are essentially making less GB per wafer too

Se_ba 6mo ago

not all DRAM capacity can switch to HBM quickly. That lag is where volatility comes from

dpoloncsak 6mo ago

I'm under the impression OAI wrote Letters of Intent, and are not actually on the hook for the RAM they requested. The others...they did not. Memory makers won't be holding the bag because Apple/Google/Samsung are contractually obligated to purchase, after the panic OAI caused.