3 ms·

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

by bombcar 7mo ago

formerly_proven 7mo ago
DRAM and to a lesser degree storage are notorious for their feast and famine cycles (Well that and collusion)
- bombcar 7mo ago
  I don’t know if they realize that collusion lends itself to feast/famine.
  - bryanrasmussen 7mo 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 7mo 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 7mo 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bit harder when you've got one of the most expensive machines on earth working in them, and production lines that'll be out of date in a couple of years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 7mo 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.
    - bluGill 7mo ago
      That is the common way, but there are companies that manage without hiring/firing. (or they hire temp workers). There is a minimum level of capacity you need to run just to keep the lights on, and figuring out how to get that low without impacting your ability to serve the highs is hard. Memory manufactures have not gotten very low, probably for good reasons, but it is something they should work on.
  - mayama 7mo ago
    Last year ai folks are all over wallstreet and articles, decrying how hardware folks are a roadblock to new frontiers in AI. They just couldn't print and pack the new chips faster.
- CamperBob2 7mo ago
  The problem in this case seems to have sprung from a lack of collusion. Altman reportedly approached Samsung and SK independently to strike deals for a large chunk of both companies' production. Neither party apparently knew he was negotiating with the other. If they had actually been communicating or colluding with each other, they would have put the screws to him, making it harder for OpenAI to assert control over the vast majority of the DRAM market. Failing that, you'd like to think a regulatory agency somewhere would step in to keep a single player from hosing everybody else, but...
  - PunchyHamster 7mo ago
    > Failing that, you'd like to think a regulatory agency somewhere would step in to keep a single player from hosing everybody else, but... Up until AI there weren't really players being able to gobble 40% of the market so nobody was looking.
  - close04 7mo ago
    > Neither party apparently knew he was negotiating with the other. I don’t buy it that two of the largest manufacturers of DRAM in the world, from the same country, didn’t know this. Even of you ignore each company’s intelligence teams, that’s also the job of the country’s internal intelligence services, to make sure they know what all companies are doing and then make it so they have the best leverage to gain as much as possible. Both companies would have known “somehow” and played hardball.
    - high_na_euv 7mo ago
      Wut? How they [gov] would know that? By spying?
      - close04 7mo ago
        How would the country’s internal intelligence services know what’s happening? Yes, by spying. That’s literally their job and they have assets in every critical area in a country. Every institution, every major industry player, they are monitored to a degree by the internal intelligence in every country in the world. There are more nefarious reasons to do this but the ostensible one is that if it’s of strategic importance the country needs to know everything there is to know. The companies also do a lot of spying themselves, every bit of info could give them an edge.
whatever1 7mo ago
All of the capital intensive businesses face this issue. Chemicals, Shipping, Semiconductors etc. You get market signals that the demand is there, you acquire the necessary capital, you spend 5 years to build capacity, but guess what, 5 other market players did the same thing. So now you are doomed, because the market is flooded and you have low cash flow since you need to drop prices to compete for pennies. Now you cannot find capital, you don't invest, but guess what, neither your competitors did. So now the demand is higher than the supply. Your price per unit sold skyrocketed, but you don't have enough capacity! Rinse and repeat. Capitalists claim that this is optimal.
- tgma 7mo ago
  > Capitalists claim that this is optimal. Because that does not happen exactly as you say for all players. The demand signals will be processed and long-term risk is balanced against short-term gain in a distributed fashion, so not everyone will do the same.
  - t-3 7mo ago
    Sufficient diversity of response will only appear when there are enough competitors. When there are only a few, it doesn't necessarily work out.
- wordpad 7mo ago
  >Capitalists claim that this is optimal. It's more optimal than planned economies until we have AI planned economies with realtime feedback, I guess. Consumers get cheap goods during oversupply and most inefficient companies get elliminated during bust while consolidation leads to economies of scale.
  - whatever1 7mo ago
    No this is literally a sign of an unstable system with too high of a gain K. There is an alternative where legislation dampens this behavior but the short term profits will be lower. Hence the hawks don’t like it.

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

by bombcar 7mo ago

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

formerly_proven 7mo ago

DRAM and to a lesser degree storage are notorious for their feast and famine cycles (Well that and collusion)

bombcar 7mo ago
I don’t know if they realize that collusion lends itself to feast/famine.
- bryanrasmussen 7mo 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 7mo 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 7mo 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 7mo 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.
  - bluGill 7mo ago
    That is the common way, but there are companies that manage without hiring/firing. (or they hire temp workers). There is a minimum level of capacity you need to run just to keep the lights on, and figuring out how to get that low without impacting your ability to serve the highs is hard. Memory manufactures have not gotten very low, probably for good reasons, but it is something they should work on.
- mayama 7mo ago
  Last year ai folks are all over wallstreet and articles, decrying how hardware folks are a roadblock to new frontiers in AI. They just couldn't print and pack the new chips faster.
CamperBob2 7mo ago
The problem in this case seems to have sprung from a lack of collusion. Altman reportedly approached Samsung and SK independently to strike deals for a large chunk of both companies' production. Neither party apparently knew he was negotiating with the other. If they had actually been communicating or colluding with each other, they would have put the screws to him, making it harder for OpenAI to assert control over the vast majority of the DRAM market. Failing that, you'd like to think a regulatory agency somewhere would step in to keep a single player from hosing everybody else, but...
- PunchyHamster 7mo ago
  > Failing that, you'd like to think a regulatory agency somewhere would step in to keep a single player from hosing everybody else, but... Up until AI there weren't really players being able to gobble 40% of the market so nobody was looking.
- close04 7mo ago
  > Neither party apparently knew he was negotiating with the other. I don’t buy it that two of the largest manufacturers of DRAM in the world, from the same country, didn’t know this. Even of you ignore each company’s intelligence teams, that’s also the job of the country’s internal intelligence services, to make sure they know what all companies are doing and then make it so they have the best leverage to gain as much as possible. Both companies would have known “somehow” and played hardball.
  - high_na_euv 7mo ago
    Wut? How they [gov] would know that? By spying?
    - close04 7mo ago
      How would the country’s internal intelligence services know what’s happening? Yes, by spying. That’s literally their job and they have assets in every critical area in a country. Every institution, every major industry player, they are monitored to a degree by the internal intelligence in every country in the world. There are more nefarious reasons to do this but the ostensible one is that if it’s of strategic importance the country needs to know everything there is to know. The companies also do a lot of spying themselves, every bit of info could give them an edge.

whatever1 7mo ago

All of the capital intensive businesses face this issue. Chemicals, Shipping, Semiconductors etc. You get market signals that the demand is there, you acquire the necessary capital, you spend 5 years to build capacity, but guess what, 5 other market players did the same thing. So now you are doomed, because the market is flooded and you have low cash flow since you need to drop prices to compete for pennies. Now you cannot find capital, you don't invest, but guess what, neither your competitors did. So now the demand is higher than the supply. Your price per unit sold skyrocketed, but you don't have enough capacity! Rinse and repeat. Capitalists claim that this is optimal.

tgma 7mo ago
> Capitalists claim that this is optimal. Because that does not happen exactly as you say for all players. The demand signals will be processed and long-term risk is balanced against short-term gain in a distributed fashion, so not everyone will do the same.
- t-3 7mo ago
  Sufficient diversity of response will only appear when there are enough competitors. When there are only a few, it doesn't necessarily work out.
wordpad 7mo ago
>Capitalists claim that this is optimal. It's more optimal than planned economies until we have AI planned economies with realtime feedback, I guess. Consumers get cheap goods during oversupply and most inefficient companies get elliminated during bust while consolidation leads to economies of scale.
- whatever1 7mo ago
  No this is literally a sign of an unstable system with too high of a gain K. There is an alternative where legislation dampens this behavior but the short term profits will be lower. Hence the hawks don’t like it.