14 ms·

What was most surprising about all this to me was this line: > So modern DRAM manufacturing is an extraordinarily complex and expensive process. Building a sin

What was most surprising about all this to me was this line: > So modern DRAM manufacturing is an extraordinarily complex and expensive process. Building a single state-of-the-art DRAM fabrication facility, a “fab,” will cost you about $15 to $20 billion; acquiring all the necessary equipment, like lithography tools and etching machines, will cost you another few billion; and then it’ll take you a few years of producing substandard and defective memory chips before your yields start to look competitive. Extraordinarily complex and expensive! And yet I look at all the money being shuffled around between Nvidia and Google and Microsoft and Amazon and Apple and can't help but think that this is a tiny amount in comparison to what they're moving around on the stock market buying shares in each other. Apple in particular has $20B in its couch cushions and is very vertically integrated and hardware-focused. Apple silicon is currently made by TSMC, but it seems they'd be a prime candidate to spin up their own memory fab. I suppose the biggest problem to current executives at each company is the "few years" until that investment yields results, in the short term it's better to pay through the nose and buy GPUs with HBM at any price.

swatcoder 5mo ago
And what happens if the market settles back down or the leading memory tech pivots away from what you invested all this capital and time chasing? You'd need a very strong, very particular forecast to make such a costly bet. And conversely, it may say something about their internal forecasts that they're not making the bet.
- shimman 5mo ago
  Why should society care about people making profits? Society would greatly benefit from cheap abundant ram than FAANG shares going up. I'm kinda sick about only caring that some billionaire makes more money and would rather you know... actually improve conditions to better society. This is why China is eating the West. Quite easy to start an electronics company when you have such an abundance of suppliers, compare this to America where there is maybe one or two players in the entire nation. Quite pathetic, but we live in a pathetic world so it tracks.
  - hcurtiss 5mo ago
    You think Chinese businesses aren’t in it for the profits?
    - xbmcuser 5mo ago
      While these private companies exist and are in it for the profits, they don't control the government, meaning any potential price gouging is strictly regulated. The Chinese government actively prevents private companies from becoming too powerful or dominating an industry in the public eye. Instead, they foster competition by promoting and building up alternative companies. A great example of this is how they handled digital payments. While Visa and Mastercard maintain a monopoly in the West, China faced a similar situation when private mobile payment systems began dominating the market. In response, the government stepped in and forced the ecosystem to open up to competitors.
      - sroussey 5mo ago
        But not open up to competitors like Visa.
        cwillu 5mo ago
        Correct. A level playing field for all companies regardless of other factors is explicitly a non-goal.
        ceejayoz 5mo ago
        Credit card processors are, as a natural aspect of their purpose, a deeply useful surveillance network.
        handle584 5mo ago
        In the opposite direction unionpay works at major US retailers directly or at least through a partnership with discover, even Alipay is available at CVS, while us processors presence in China is next to zero.
- lesuorac 5mo ago
  > And conversely, it may say something about their internal forecasts that they're not making the bet. Idk if you can read into it that way. All these companies have cafeterias but you don't see them investing into farmland so they can get their bananas a few cents cheaper. But also why bother spending 20B on a fab when you can invest 20B into TSMC and let them build the fab?
  - dyauspitr 5mo ago
    Because having every major company in America’s eggs in one basket is as insane as it gets, especially with China bearing down on Taiwan.
    - eecc 5mo ago
      That’s an entirely different framework, one that doesn’t concern investment decisions of Apple or Google. I do agree that USA and EU could foot the bill and subsidize a couple billions in such industrial infrastructure, perhaps taking back a cut of the profit rather than privatizing all of it. But they’re not doing it, or are making pitiful efforts at that
      - Maxion 5mo ago
        It's just an insane amount of money to invest with the long-term effect of you oversaturating the chip market. Throwing 20B into a chip fab in the EU would be politically a very unpopular move, if it's done as a public company or worse directly state owned, you'll royally piss of Taiwan, South Korea and China and it's likely they'd retaliate by e.g. subsidising their auto industry more in order to give the death blow to the EU auto industry.
        simonh 5mo ago
        They'd more likely split themselves laughing. The solution to threats to global economic integration is to address the threats to global economic integration. It's not to cannibalise our own full-employment high value economies, by diverting enormous capital and labour into duplicating vast swathes of lower value jobs we don't actually have the work force for anyway, just so we can pay unaffordable prices for the resulting goods. We probably both agree it's an absurd fantasy, and the people trying to make stuff like this happen are implementing policies that ensure that it won't, such as putting tariffs on the inputs they need to build out this domestic manufacturing capacity in the first place.
- dyauspitr 5mo ago
  Meta spent more on the Metaverse, it’s all the most certainly something they can afford to take a hit on and they won’t because memory and CPU usage is only going to go up from this point on.
- tw04 5mo ago
  > And conversely, it may say something about their internal forecasts that they're not making the bet. It says they are no longer worried about being punished for monopolistic behavior and have bet a “ballroom donation” will exempt them from another round of punishment. I feel like folks around here have already forgotten about the last time the memory suppliers quietly agreed to keep raising prices and stop competing with each other. https://en.wikipedia.org/wiki/DRAM_price_fixing_scandal https://en.wikipedia.org/wiki/DRAM_price_fixing_scandal
- Eric_WVGG 5mo ago
  I’m of the (possibly unpopular) opinion that ~80% of these new data centers are never going to see the light of day. None of the economics or supply needs of these things make any sense. The water is generally not there, electric transformers are next to impossible to acquire. I just read about one in Utah that’s supposed to be 2.5x the size of Manhattan?? https://www.theverge.com/ai-artificial-intelligence/933687/utah-stratos-project-data-center-kevin-oleary https://www.theverge.com/ai-artificial-intelligence/933687/u... I could be wrong, but I think a lot of this was planned by software guys who are used to brute-forcing their way through “impossible” problems. But those were software problems, where the limits are mostly theoretical. In the world of atoms, limitations are real.
  - throwaway85825 5mo ago
    Neither transformers or water are the limiting factor, cash is. Right now the big 3 are taking all their profits and building data centers. If there's not an ROO they'll stop. Transformers aren't so complex that production can't increase. Most water is used for agriculture and right now the data centers can pay more for it.
richforrester 5mo ago
Literally the most overwhelming thought, reading this, is "man, capitalism is a mistake" The amounts of money circulating whilst some of us struggle to make rent ... Nothing fair, or just, about this world we live in
- mhb 5mo ago
  Courtesy of TFA and capitalism: "In 1985, if you were a reasonably affluent American, the best computer that you could afford was the IBM PC AT. The PC AT would cost you about $6,000—$19,400 in 2026 dollars—and thus represented about a quarter of the median American’s annual income; and it ran on an Intel 80286 processor, capable of something like 900,000 instructions per second. Today, if you find yourself in a market stall in Nairobi or Lagos, you’ll be able to find a cheap smartphone—like the Tecno Spark Go, manufactured by China’s Transsion—for somewhere between $30 and $120. That phone will run on a processor capable of billions of calculations per second."
  - hackyhacky 5mo ago
    This quote has nothing to do with capitalism. Please note that "commerce" and "capitalism" are not synonymous, and that the former does not imply the latter. Capitalism is in no way a prerequisite for technological development.
    - CamperBob2 5mo ago
      Capitalism is in no way a prerequisite for technological development. Really? Who else builds stuff?
      - hackyhacky 5mo ago
        > Really? Who else builds stuff? Said the Christian in pre-Englightenment Europe: "Well, of course Christianity is the one true religion. After all, the whole civilized world is Christian."
        5mo ago
xbmcuser 5mo ago
Part of this is a lie high prices for equipment has a lot to do with monopolies in the whole supply chain and one of the major reason I am rooting for China to get parity on node as that would mean it would have been able to break all the monopolies and we get competition on the whole production from uv machines, wafer, on equipment for storing etc. Renewables are rapidly taking the world to very cheap or free energy but it would be bad if the way to best use the energy for production is controlled by a few corporations
- s08148692 5mo ago
  China becoming self sufficient in chip fab could be the trigger point for WW3 so lets not root too hard
  - xbmcuser 5mo ago
    no we already are going to a world war with the pedophile president and parliament (for some reason people like to pretend he is the only one in the epstein files) being controlled by a mass child murdering prime minister of a racist apartheid country they will attack Iran again and start the world war.
m463 5mo ago
> Apple in particular has $20B in its couch cushions I wonder how long it REALLY took them to move from intel to apple silicon, which they don't even make. It might be easy, like a consumer deciding to generate their own electricity (pv on the roof) or it might be slightly harder, like a consumer deciding to generate their own electricity by drilling for oil, refining it, etc...
- prewett 5mo ago
  Well, they acquired PA Semi in 2008, they used their first chip (the A4) in the iPad in 2010, and they progressively iterated using the chip in phones until they announced the switch from Intel in 2020 (concurrently, more or less, with the A14). So it took them 12 years and 10 different chips.
- mschuster91 5mo ago
  > I wonder how long it REALLY took them to move from intel to apple silicon, which they don't even make. Apple has much, much more control over their silicon than they ever had with Intel. With Intel, they were stuck with whatever Intel could supply - and that, particularly regarding power management, wasn't much. In contrast, for ARM, Apple has been one of their longest-ever partners [1], with Apple holding one of the very rare and probably very expensive "Architecture Licenses" that allow Apple to not just build CPUs out of pre-made IP blocks, but also design their own cores and, and that is the crucial thing, extend the ARM instruction set on their CPUs. The latter is what made the ARM move feasible, there would have been no way of getting high-performance emulation of x86 without a few specific extensions. [1] https://www.macrumors.com/2023/09/06/apple-inks-new-deal-arm-chip-designer/ https://www.macrumors.com/2023/09/06/apple-inks-new-deal-arm...
mrandish 5mo ago
> it seems they'd be a prime candidate to spin up their own memory fab. While Apple et al certainly have the money to tilt up their own fab, they're savvy enough to understand the memory market's long history of constant boom/bust cycles. I still remember the huge DRAM shortage in late 80s forcing my startup at the time to delay launching our new product for a year. People assume Apple cares about vertically integrating cost but they're actually focused on integrating margin. Apple has billions in cash on hand and when they think about what to do with it, a key metric is Return on Capital, especially the margin that capital will generate. Since a core metric public companies are judged on is blended margin, they are looking for ways their bags o' cash can be put to work generating revenue at margins that will pull their current average margin up vs down. Averaged over time, mainstream memory devices are historically one of the worst margin areas of the semi market. It's super expensive to tilt up a fab on a new node but once you do, turning the crank faster to make a lot more chips isn't too hard because mainstream DRAM tends to be quite uniform. So when a fab on a new node and/or RAM generation first opens, the margins tend to be pretty great. But as the node matures and/or the RAM generation goes from 'new' to 'commodity', competition heats up as everyone gets better at making more faster. Then they're tempted to maximize revenue by cutting prices until their mature fab is at 101% utilization. And that eventually drives margins down until someone's selling near cost to sustain their low-price-enabling volume - with occasional dips below cost when they get stuck holding excess inventory. That's why cash-rich companies with high margins like Apple are delighted to buy DRAM built with Other People's Money. As long as the DRAM market is under competitive pressure, Apple gets to shop their huge orders around to get the absolute lowest price on RAM that was built with other investor's low margin dollars.
- baxtr 5mo ago
  To reframe your great comment: Is it fair to conclude that DRAM is basically a commodity that can be specified well enough by a set of parameters? If so it won’t allow you to get any competitive advantage in your products and thus wouldn’t be a business you want to be in as Apple.
  - mrandish 5mo ago
    Yes, that's what I meant by "Mainstream DRAM". The basic parameters are specified by standards like JEDEC, so the most common types can be used in many systems thus reach high volumes. This can be less true for specialized RAM like HBM or the highest performance grades.
stouset 5mo ago
While I think Apple is a prime candidate to do something like this financially, I’ve never had the impression that they ever want to get involved in something “just” for vertical efficiency. There’s always a long-term vision where they can leverage it to gain a competitive edge that their competitors can’t match (the PA Semi acquisition being a perfect example of this). RAM doesn’t seem like something where simply owning the manufacturing could lead to a disproportionate competitive edge. It would just be a vertical efficiency gamble that may or may not pay off. Of course that could simply be a failure of my imagination.
dyauspitr 5mo ago
Apple, Google Microsoft Amazon should all set up memory and CPU fabs. I don’t understand why they don’t do it. $400 million ASML machine is chump change and you can almost certainly find/train locals or provide incentives to immigrants to come here as workers to fill the roles there.
- eecc 5mo ago
  Well, isn’t Musk doing something similar with his new solar panels fab? Frankly it’s ridiculous how we (the West) dropped renewables like a hot potato because it became synonymous with subsidizing China’s dominance in the field.
  - dyauspitr 5mo ago
    Now that I look into it, it looks like he is, which is a good thing. For some reason I thought Terafab was like a pie-in-the-sky idea where he was going to do compute in space on satellites or something, but it isn’t that. It’s actually a real fab in the United States and I fully support that even if Elon is a piece of shit.
- dboreham 5mo ago
  30 years ago that's how the industry was structured. IBM was the largest memory manufacturer. MBAs spent decades undoing the arrangement you're now suggesting.
- andriy_koval 5mo ago
  fabs probably was low margin business compared to selling Ads before current AI boom.
MagicMoonlight 5mo ago
It’s hilarious that they’ll spend a trillion renting GPUs instead of just making their own. Even if you were nowhere near state of the art, being able to produce millions of your own cards every year at cost would save you a lot of money.
- deleted 5mo ago
  [deleted]
Curosinono 5mo ago
They are not just shuffling money around though. Nvidia sells all the stock, prices for GPUs moved up not down. Companies like Apple don't want to be in every industry. Its risk, its cost, its expertise you need. And sure you can throw money at it but you need people. Alone hiring all the experts is probalby not that easy. Who knows how to setup a DRam Factory? It takes years to build this up
dspillett 5mo ago
> And yet I look at all the money being shuffled around between Nvidia and Google and Microsoft and Amazon and Apple A lot of that is “weird money” created by the act of passing it around between the entities or “Holywood accounting” style money that exists when convenient and will vanish the instant it might be taxed or need to be extracted from the cycle to pay for something tangible. Trying to use a large amount of that money for tangible long-term building projects risks piercing the vail.
s08148692 5mo ago
Tesla is building their own fab Huge gamble - If they pull it off I wouldn't be surprised if other companies follow
gmerc 5mo ago
And then everyone will scream unfair when the Chinese roll up the market from the bottom.
ksec 5mo ago
$20B a single Fab. And you don't just have one Fab. You need multiple. And again I have to state this every time, the most expensive Fab is empty Fab. You need to fill it, and you need to fill constant and consistently for years. >but it seems they'd be a prime candidate to spin up their own memory fab. They will be the prime candidate to work with memory makers for additional capacity. Not to start their own one. Here is a $20B cheque and 5 years guarantee of orders. Go and make me some memory for his price. I mean this is the same story for iPod and NAND. It seems we are repeating what we should have learned.
- tw04 5mo ago
  You needed to fill it constantly in the “old times” when memory was ubiquitous and cheap to justify the finance payments on the debt you incurred to build it. When you’re Apple and can build it with cash, and ram is currently so insane it saves you a decade of memory price gouging in a single year, the math changes quickly.
  - ksec 5mo ago
    >and ram is currently so insane it saves you a decade of memory price gouging in a single year, the math changes quickly. Apple is not paying the same insane price most people / other players are paying.
deleted 5mo ago
[deleted]
GeekyBear 5mo ago
For a commodity part, Apple has a history of buying a manufacturing partner a dedicated manufacturing line in exchange for locking down a guaranteed supply at a lower overall price. It's one of the early moves Tim Cook made after joining Apple to lock down enough flash memory supply to move iPods from hard drives to flash.

swatcoder 5mo ago

And what happens if the market settles back down or the leading memory tech pivots away from what you invested all this capital and time chasing? You'd need a very strong, very particular forecast to make such a costly bet. And conversely, it may say something about their internal forecasts that they're not making the bet.

shimman 5mo ago
Why should society care about people making profits? Society would greatly benefit from cheap abundant ram than FAANG shares going up. I'm kinda sick about only caring that some billionaire makes more money and would rather you know... actually improve conditions to better society. This is why China is eating the West. Quite easy to start an electronics company when you have such an abundance of suppliers, compare this to America where there is maybe one or two players in the entire nation. Quite pathetic, but we live in a pathetic world so it tracks.
- hcurtiss 5mo ago
  You think Chinese businesses aren’t in it for the profits?
  - xbmcuser 5mo ago
    While these private companies exist and are in it for the profits, they don't control the government, meaning any potential price gouging is strictly regulated. The Chinese government actively prevents private companies from becoming too powerful or dominating an industry in the public eye. Instead, they foster competition by promoting and building up alternative companies. A great example of this is how they handled digital payments. While Visa and Mastercard maintain a monopoly in the West, China faced a similar situation when private mobile payment systems began dominating the market. In response, the government stepped in and forced the ecosystem to open up to competitors.
    - sroussey 5mo ago
      But not open up to competitors like Visa.
      - cwillu 5mo ago
        Correct. A level playing field for all companies regardless of other factors is explicitly a non-goal.
      - ceejayoz 5mo ago
        Credit card processors are, as a natural aspect of their purpose, a deeply useful surveillance network.
        handle584 5mo ago
        In the opposite direction unionpay works at major US retailers directly or at least through a partnership with discover, even Alipay is available at CVS, while us processors presence in China is next to zero.
lesuorac 5mo ago
> And conversely, it may say something about their internal forecasts that they're not making the bet. Idk if you can read into it that way. All these companies have cafeterias but you don't see them investing into farmland so they can get their bananas a few cents cheaper. But also why bother spending 20B on a fab when you can invest 20B into TSMC and let them build the fab?
- dyauspitr 5mo ago
  Because having every major company in America’s eggs in one basket is as insane as it gets, especially with China bearing down on Taiwan.
  - eecc 5mo ago
    That’s an entirely different framework, one that doesn’t concern investment decisions of Apple or Google. I do agree that USA and EU could foot the bill and subsidize a couple billions in such industrial infrastructure, perhaps taking back a cut of the profit rather than privatizing all of it. But they’re not doing it, or are making pitiful efforts at that
    - Maxion 5mo ago
      It's just an insane amount of money to invest with the long-term effect of you oversaturating the chip market. Throwing 20B into a chip fab in the EU would be politically a very unpopular move, if it's done as a public company or worse directly state owned, you'll royally piss of Taiwan, South Korea and China and it's likely they'd retaliate by e.g. subsidising their auto industry more in order to give the death blow to the EU auto industry.
      - simonh 5mo ago
        They'd more likely split themselves laughing. The solution to threats to global economic integration is to address the threats to global economic integration. It's not to cannibalise our own full-employment high value economies, by diverting enormous capital and labour into duplicating vast swathes of lower value jobs we don't actually have the work force for anyway, just so we can pay unaffordable prices for the resulting goods. We probably both agree it's an absurd fantasy, and the people trying to make stuff like this happen are implementing policies that ensure that it won't, such as putting tariffs on the inputs they need to build out this domestic manufacturing capacity in the first place.
dyauspitr 5mo ago
Meta spent more on the Metaverse, it’s all the most certainly something they can afford to take a hit on and they won’t because memory and CPU usage is only going to go up from this point on.
tw04 5mo ago
> And conversely, it may say something about their internal forecasts that they're not making the bet. It says they are no longer worried about being punished for monopolistic behavior and have bet a “ballroom donation” will exempt them from another round of punishment. I feel like folks around here have already forgotten about the last time the memory suppliers quietly agreed to keep raising prices and stop competing with each other. https://en.wikipedia.org/wiki/DRAM_price_fixing_scandal https://en.wikipedia.org/wiki/DRAM_price_fixing_scandal
Eric_WVGG 5mo ago
I’m of the (possibly unpopular) opinion that ~80% of these new data centers are never going to see the light of day. None of the economics or supply needs of these things make any sense. The water is generally not there, electric transformers are next to impossible to acquire. I just read about one in Utah that’s supposed to be 2.5x the size of Manhattan?? https://www.theverge.com/ai-artificial-intelligence/933687/utah-stratos-project-data-center-kevin-oleary https://www.theverge.com/ai-artificial-intelligence/933687/u... I could be wrong, but I think a lot of this was planned by software guys who are used to brute-forcing their way through “impossible” problems. But those were software problems, where the limits are mostly theoretical. In the world of atoms, limitations are real.
- throwaway85825 5mo ago
  Neither transformers or water are the limiting factor, cash is. Right now the big 3 are taking all their profits and building data centers. If there's not an ROO they'll stop. Transformers aren't so complex that production can't increase. Most water is used for agriculture and right now the data centers can pay more for it.

richforrester 5mo ago

Literally the most overwhelming thought, reading this, is "man, capitalism is a mistake" The amounts of money circulating whilst some of us struggle to make rent ... Nothing fair, or just, about this world we live in

mhb 5mo ago
Courtesy of TFA and capitalism: "In 1985, if you were a reasonably affluent American, the best computer that you could afford was the IBM PC AT. The PC AT would cost you about $6,000—$19,400 in 2026 dollars—and thus represented about a quarter of the median American’s annual income; and it ran on an Intel 80286 processor, capable of something like 900,000 instructions per second. Today, if you find yourself in a market stall in Nairobi or Lagos, you’ll be able to find a cheap smartphone—like the Tecno Spark Go, manufactured by China’s Transsion—for somewhere between $30 and $120. That phone will run on a processor capable of billions of calculations per second."
- hackyhacky 5mo ago
  This quote has nothing to do with capitalism. Please note that "commerce" and "capitalism" are not synonymous, and that the former does not imply the latter. Capitalism is in no way a prerequisite for technological development.
  - CamperBob2 5mo ago
    Capitalism is in no way a prerequisite for technological development. Really? Who else builds stuff?
    - hackyhacky 5mo ago
      > Really? Who else builds stuff? Said the Christian in pre-Englightenment Europe: "Well, of course Christianity is the one true religion. After all, the whole civilized world is Christian."
      - 5mo ago

xbmcuser 5mo ago

Part of this is a lie high prices for equipment has a lot to do with monopolies in the whole supply chain and one of the major reason I am rooting for China to get parity on node as that would mean it would have been able to break all the monopolies and we get competition on the whole production from uv machines, wafer, on equipment for storing etc. Renewables are rapidly taking the world to very cheap or free energy but it would be bad if the way to best use the energy for production is controlled by a few corporations

s08148692 5mo ago
China becoming self sufficient in chip fab could be the trigger point for WW3 so lets not root too hard
- xbmcuser 5mo ago
  no we already are going to a world war with the pedophile president and parliament (for some reason people like to pretend he is the only one in the epstein files) being controlled by a mass child murdering prime minister of a racist apartheid country they will attack Iran again and start the world war.

m463 5mo ago

> Apple in particular has $20B in its couch cushions I wonder how long it REALLY took them to move from intel to apple silicon, which they don't even make. It might be easy, like a consumer deciding to generate their own electricity (pv on the roof) or it might be slightly harder, like a consumer deciding to generate their own electricity by drilling for oil, refining it, etc...

prewett 5mo ago
Well, they acquired PA Semi in 2008, they used their first chip (the A4) in the iPad in 2010, and they progressively iterated using the chip in phones until they announced the switch from Intel in 2020 (concurrently, more or less, with the A14). So it took them 12 years and 10 different chips.
mschuster91 5mo ago
> I wonder how long it REALLY took them to move from intel to apple silicon, which they don't even make. Apple has much, much more control over their silicon than they ever had with Intel. With Intel, they were stuck with whatever Intel could supply - and that, particularly regarding power management, wasn't much. In contrast, for ARM, Apple has been one of their longest-ever partners [1], with Apple holding one of the very rare and probably very expensive "Architecture Licenses" that allow Apple to not just build CPUs out of pre-made IP blocks, but also design their own cores and, and that is the crucial thing, extend the ARM instruction set on their CPUs. The latter is what made the ARM move feasible, there would have been no way of getting high-performance emulation of x86 without a few specific extensions. [1] https://www.macrumors.com/2023/09/06/apple-inks-new-deal-arm-chip-designer/ https://www.macrumors.com/2023/09/06/apple-inks-new-deal-arm...

mrandish 5mo ago

> it seems they'd be a prime candidate to spin up their own memory fab. While Apple et al certainly have the money to tilt up their own fab, they're savvy enough to understand the memory market's long history of constant boom/bust cycles. I still remember the huge DRAM shortage in late 80s forcing my startup at the time to delay launching our new product for a year. People assume Apple cares about vertically integrating cost but they're actually focused on integrating margin. Apple has billions in cash on hand and when they think about what to do with it, a key metric is Return on Capital, especially the margin that capital will generate. Since a core metric public companies are judged on is blended margin, they are looking for ways their bags o' cash can be put to work generating revenue at margins that will pull their current average margin up vs down. Averaged over time, mainstream memory devices are historically one of the worst margin areas of the semi market. It's super expensive to tilt up a fab on a new node but once you do, turning the crank faster to make a lot more chips isn't too hard because mainstream DRAM tends to be quite uniform. So when a fab on a new node and/or RAM generation first opens, the margins tend to be pretty great. But as the node matures and/or the RAM generation goes from 'new' to 'commodity', competition heats up as everyone gets better at making more faster. Then they're tempted to maximize revenue by cutting prices until their mature fab is at 101% utilization. And that eventually drives margins down until someone's selling near cost to sustain their low-price-enabling volume - with occasional dips below cost when they get stuck holding excess inventory. That's why cash-rich companies with high margins like Apple are delighted to buy DRAM built with Other People's Money. As long as the DRAM market is under competitive pressure, Apple gets to shop their huge orders around to get the absolute lowest price on RAM that was built with other investor's low margin dollars.

baxtr 5mo ago
To reframe your great comment: Is it fair to conclude that DRAM is basically a commodity that can be specified well enough by a set of parameters? If so it won’t allow you to get any competitive advantage in your products and thus wouldn’t be a business you want to be in as Apple.
- mrandish 5mo ago
  Yes, that's what I meant by "Mainstream DRAM". The basic parameters are specified by standards like JEDEC, so the most common types can be used in many systems thus reach high volumes. This can be less true for specialized RAM like HBM or the highest performance grades.

stouset 5mo ago

While I think Apple is a prime candidate to do something like this financially, I’ve never had the impression that they ever want to get involved in something “just” for vertical efficiency. There’s always a long-term vision where they can leverage it to gain a competitive edge that their competitors can’t match (the PA Semi acquisition being a perfect example of this). RAM doesn’t seem like something where simply owning the manufacturing could lead to a disproportionate competitive edge. It would just be a vertical efficiency gamble that may or may not pay off. Of course that could simply be a failure of my imagination.

dyauspitr 5mo ago

Apple, Google Microsoft Amazon should all set up memory and CPU fabs. I don’t understand why they don’t do it. $400 million ASML machine is chump change and you can almost certainly find/train locals or provide incentives to immigrants to come here as workers to fill the roles there.

eecc 5mo ago
Well, isn’t Musk doing something similar with his new solar panels fab? Frankly it’s ridiculous how we (the West) dropped renewables like a hot potato because it became synonymous with subsidizing China’s dominance in the field.
- dyauspitr 5mo ago
  Now that I look into it, it looks like he is, which is a good thing. For some reason I thought Terafab was like a pie-in-the-sky idea where he was going to do compute in space on satellites or something, but it isn’t that. It’s actually a real fab in the United States and I fully support that even if Elon is a piece of shit.
dboreham 5mo ago
30 years ago that's how the industry was structured. IBM was the largest memory manufacturer. MBAs spent decades undoing the arrangement you're now suggesting.
andriy_koval 5mo ago
fabs probably was low margin business compared to selling Ads before current AI boom.

MagicMoonlight 5mo ago

It’s hilarious that they’ll spend a trillion renting GPUs instead of just making their own. Even if you were nowhere near state of the art, being able to produce millions of your own cards every year at cost would save you a lot of money.

deleted 5mo ago
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Curosinono 5mo ago

They are not just shuffling money around though. Nvidia sells all the stock, prices for GPUs moved up not down. Companies like Apple don't want to be in every industry. Its risk, its cost, its expertise you need. And sure you can throw money at it but you need people. Alone hiring all the experts is probalby not that easy. Who knows how to setup a DRam Factory? It takes years to build this up

dspillett 5mo ago

> And yet I look at all the money being shuffled around between Nvidia and Google and Microsoft and Amazon and Apple A lot of that is “weird money” created by the act of passing it around between the entities or “Holywood accounting” style money that exists when convenient and will vanish the instant it might be taxed or need to be extracted from the cycle to pay for something tangible. Trying to use a large amount of that money for tangible long-term building projects risks piercing the vail.

s08148692 5mo ago

Tesla is building their own fab Huge gamble - If they pull it off I wouldn't be surprised if other companies follow

gmerc 5mo ago

And then everyone will scream unfair when the Chinese roll up the market from the bottom.

ksec 5mo ago

$20B a single Fab. And you don't just have one Fab. You need multiple. And again I have to state this every time, the most expensive Fab is empty Fab. You need to fill it, and you need to fill constant and consistently for years. >but it seems they'd be a prime candidate to spin up their own memory fab. They will be the prime candidate to work with memory makers for additional capacity. Not to start their own one. Here is a $20B cheque and 5 years guarantee of orders. Go and make me some memory for his price. I mean this is the same story for iPod and NAND. It seems we are repeating what we should have learned.

tw04 5mo ago
You needed to fill it constantly in the “old times” when memory was ubiquitous and cheap to justify the finance payments on the debt you incurred to build it. When you’re Apple and can build it with cash, and ram is currently so insane it saves you a decade of memory price gouging in a single year, the math changes quickly.
- ksec 5mo ago
  >and ram is currently so insane it saves you a decade of memory price gouging in a single year, the math changes quickly. Apple is not paying the same insane price most people / other players are paying.

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GeekyBear 5mo ago

For a commodity part, Apple has a history of buying a manufacturing partner a dedicated manufacturing line in exchange for locking down a guaranteed supply at a lower overall price. It's one of the early moves Tim Cook made after joining Apple to lock down enough flash memory supply to move iPods from hard drives to flash.