4 ms·

I feel like we are basically reliving the COVID era supply chain crunch, that it's basically inevitable that in 18-36 months more capacity will come online and

by tqi 1mo ago

I feel like we are basically reliving the COVID era supply chain crunch, that it's basically inevitable that in 18-36 months more capacity will come online and prices will crash back to earth. Whether OEMs like Apple pass these savings along to consumers is tbd though.

fpoling 1mo ago
Memory orders for the whole 2027 were already reserved. There is little indication that in 2028 situation will be any better unless something drastic happens like AI crash. And then the opposite can happen like an unknown drone with 100 kg warhead striking memory production facility.
- poincareball 1mo ago
  Yeah… “unknown”. As if we don’t know any countries seeking to end democracy in Taiwan…
  - fpoling 1mo ago
    It can be Russia to limit availability of AI heavy drones for Ukraine. Or it can be a small private organization using the strike as a mean to manipulate market.
  - sirtaj 1mo ago
    Is China any less dependent on Taiwanese semiconductors than the rest of us?
    - hulitu 1mo ago
      Yes. They make their own processors.
      - sirtaj 1mo ago
        They are Taiwan's largest buyer, by a significant margin.
- yurishimo 1mo ago
  Memory orders mean nothing if the money dries up. Perhaps nvidia can float the entire market for a year or two but if the AI labs don’t start making good on their promises and pony up some cash, everything is going to crash.
- friendzis 1mo ago
  > There is little indication that in 2028 situation will be any better unless something drastic happens like AI crash. China. This market situation is a perfect storm for chinese manufacturers to step up. They don't have to chase latest-and-greatest, price-performance is one of the strongest demand drivers in consumer segment. They need a viable alternative, offer it at a reasonable price - which is much easier to achieve under current heavily inflated conditions - and that would quickly entrench them as a household brand. Remember, it's not that there's no chinese lithography tech at all, it's just not advanced enough to yield mass production silicon at commercially viable prices. It might be the case that at current market conditions this caveat does not hold and all they need to do is ship. Even if the current prices mean they do it at break-even it would still be an enormously massive win. Again, they don't have to compete at the flagship level from the get go, they need something commercially viable. There are tons of Chinese companies in the west and probably even more western on the outside chinese white-label goods. Chinese government has enough weight to push domestic silicon on those companies to create domestic silicon industry that can make the unit economies work. All in all, there is a very likely scenario where this current AI boom and the resulting crunch on silicon supply creates a competitive silicon industry in China. If you think something in the realm of "I would not buy chinese silicon even if it was cheaper" it does not matter. Look at smartphone market share outside of USA, Japan and West Europe: in majority of the world Apple+Samsung barely touches 50%. What this "rest of the world" lacks in individual purchasing power it more than makes up for in numbers.
  - midas89 1mo ago
    Here is what I'll push back with: Even if somehow you had the super hero ability to create this silicon out of thin air and even double it, I'd argue that it wouldn't drive down prices. Simply because both the AI datacenter's need and their ability to pay is bigger then the consumer market. So far it seems that the more silicon you throw at AI, then the better your reasoning output. So the cheaper the chips, the more these datacenters will buy. Arguably they would buy even more because then you can tell investors that you have more powerful models (due to more compute) and your price per output is cheaper (because average hardware is cheaper).
keyringlight 1mo ago
I'd add the gold rush for hardware to mine crypto coins, depending what component you're looking at. What stands out to me is that you can't rely on pricing acting predictably any more, it used to be that when a new product/generation released there would be a few weeks of high demand/short supply, but when that was satisfied it would be a nice graceful decline over its lifespan until the next generation was nearly ready to come out and take its place in the market. You can look at old PCPartPicker trends graphs via archive.org to see this over and over. Now it feels like trying to catch a falling knife and it really raises the threshold for whether I actually need an upgrade versus other areas of my life where I could spend.

by tqi 1mo ago

fpoling 1mo ago

Memory orders for the whole 2027 were already reserved. There is little indication that in 2028 situation will be any better unless something drastic happens like AI crash. And then the opposite can happen like an unknown drone with 100 kg warhead striking memory production facility.

poincareball 1mo ago
Yeah… “unknown”. As if we don’t know any countries seeking to end democracy in Taiwan…
- fpoling 1mo ago
  It can be Russia to limit availability of AI heavy drones for Ukraine. Or it can be a small private organization using the strike as a mean to manipulate market.
- sirtaj 1mo ago
  Is China any less dependent on Taiwanese semiconductors than the rest of us?
  - hulitu 1mo ago
    Yes. They make their own processors.
    - sirtaj 1mo ago
      They are Taiwan's largest buyer, by a significant margin.
yurishimo 1mo ago
Memory orders mean nothing if the money dries up. Perhaps nvidia can float the entire market for a year or two but if the AI labs don’t start making good on their promises and pony up some cash, everything is going to crash.
friendzis 1mo ago
> There is little indication that in 2028 situation will be any better unless something drastic happens like AI crash. China. This market situation is a perfect storm for chinese manufacturers to step up. They don't have to chase latest-and-greatest, price-performance is one of the strongest demand drivers in consumer segment. They need a viable alternative, offer it at a reasonable price - which is much easier to achieve under current heavily inflated conditions - and that would quickly entrench them as a household brand. Remember, it's not that there's no chinese lithography tech at all, it's just not advanced enough to yield mass production silicon at commercially viable prices. It might be the case that at current market conditions this caveat does not hold and all they need to do is ship. Even if the current prices mean they do it at break-even it would still be an enormously massive win. Again, they don't have to compete at the flagship level from the get go, they need something commercially viable. There are tons of Chinese companies in the west and probably even more western on the outside chinese white-label goods. Chinese government has enough weight to push domestic silicon on those companies to create domestic silicon industry that can make the unit economies work. All in all, there is a very likely scenario where this current AI boom and the resulting crunch on silicon supply creates a competitive silicon industry in China. If you think something in the realm of "I would not buy chinese silicon even if it was cheaper" it does not matter. Look at smartphone market share outside of USA, Japan and West Europe: in majority of the world Apple+Samsung barely touches 50%. What this "rest of the world" lacks in individual purchasing power it more than makes up for in numbers.
- midas89 1mo ago
  Here is what I'll push back with: Even if somehow you had the super hero ability to create this silicon out of thin air and even double it, I'd argue that it wouldn't drive down prices. Simply because both the AI datacenter's need and their ability to pay is bigger then the consumer market. So far it seems that the more silicon you throw at AI, then the better your reasoning output. So the cheaper the chips, the more these datacenters will buy. Arguably they would buy even more because then you can tell investors that you have more powerful models (due to more compute) and your price per output is cheaper (because average hardware is cheaper).

keyringlight 1mo ago

I'd add the gold rush for hardware to mine crypto coins, depending what component you're looking at. What stands out to me is that you can't rely on pricing acting predictably any more, it used to be that when a new product/generation released there would be a few weeks of high demand/short supply, but when that was satisfied it would be a nice graceful decline over its lifespan until the next generation was nearly ready to come out and take its place in the market. You can look at old PCPartPicker trends graphs via archive.org to see this over and over. Now it feels like trying to catch a falling knife and it really raises the threshold for whether I actually need an upgrade versus other areas of my life where I could spend.