- cross-posted to:
- fuck_ai@lemmy.world
- hackernews@lemmy.bestiver.se
- cross-posted to:
- fuck_ai@lemmy.world
- hackernews@lemmy.bestiver.se
Memory-maker Micron has found a way to keep prices for its products sky-high for another five years, by signing 16 “strategic customer agreements” (SCAs) that include a floor price the company says comes with “a very robust gross margin for Micron, well above our peak quarterly margins in any past cycle.”
Micron CEO, president and chairman Sanjay Mehrotra explained the SCAs in prepared remarks delivered during the company’s Q3 earnings call. He explained that Micron has signed 16 SCAs, most of them covering 2026 to 2030, and that they involve a commitment to buy a certain quantity of product and pay for it in a pricing band that has a floor and a ceiling price. The floor price covers the historically high gross margins mentioned above, and the ceiling price means those who commit to an SCA are insulated if memory prices go even higher.
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Hopefully Chinese firms recognize the gap in the market and increase their capacity.
They are scaling up but as with other things they will most likely scale to their inner market first, and then I doubt they’ll subsidize a price depreciation to help westerners when they can get the profits for themselves
Yes, I want some slave labor RAM.
It’s all slave labour RAM, one way or another.
The fact you think high tech silicon manufacturing, so complex to do that only few companies around the world can do it, is a high slave labor sector tell you everything you need to know about your thinking process.
It’s “peasant with a dirty pitchfork”-work, really.
Backyard chip foundries, just like Mao wanted
Maybe it’s time to open up a hipster bespoke ram shop. You may only get 1kb but it will be the most beautiful hand-woven core memory you’ve ever seen.
Artisanal cores
This is just racism btw, get help.
Your China apologists arguments are so tired, overused, and just … lazy.
What’s lazy is assuming chinese people have no ability for self determination and holding that racist belief to such an extreme level of nonsensicality that you believe literally the most high tech job in world history, one that is done 99% by machines because humans objectively cannot possibly do the work, one that is overseen by people with a minimum of one PhD, one where there is no non-degree holder in the building, is somehow done by slaves…
Because what, you saw a BBC or RFA or other NED article saying China uses prison labor as a form of rehabilitation one time so now no Chinese person can do something without slaves?
If you were to critically analyze any of your thoughts you’d be embarrassed to how ridiculous your thoughts have become. Replace Chinese for any other nationality and see if what you’re about to say makes sense.
People see your nonsense brigading and you’re just going to get .ml defederated.
You’ll have to start all over from scratch again.
So if you direct your attention to the instance name next to my username, you might see that your racist comments are just unpopular.
Your comments are impressively unpopular. It’s really rare that I see comments downvoted into double digits given Lemmy’s small size.
Have you maybe considered you’re just wrong?
I’m in a pretty mercenary mindset about it these days TBH. I’ve got some money on the table, whoever can provide 32gb of RAM and three HDDs for my RAID at a price that’s not ridiculous can have it.
Hopefully the bubble bursts next year, and we all eat popcorn watching Micron’s revenue.
The same Micron that plead guilty to price fixing of memory 20 years ago.
https://www.theregister.com/off-prem/2004/02/27/memory-makers-hit-by-price-fixing-claims/1070959
not the same as price fixing if their entire output is being shoveled into long term agreed-upon contracts, is it?
gross margin for Micron
Gross indeed. Fucking greedy scumbags
Remember they are traitors to actual customers when the bubble burtsts.
They should fail, totally, and vanish from the world.
Traitors would mean they were ever on your side. Welcome to capitalism, bud. They’ve always been on the side of maximum profit, like all other corporations.
What alternatives would you suggest?
There sadly are none, now, outside of the “Big Three” who all did the same.
I’d suggest we start actively targeting smaller businesses for our suport, to prevent a monopol… Or triopoly in this case, from allowing everyone to be screwed by collusion and manipulation of markets and pricing.
Not a lot you can do with RAM, or SSDs, or GPUs now, but if we get competitors crop up we should be active in our suport of them and avoiding the ones who want to charge you $600 for an SD card now.
Plus a lot of this is part of the Bezos plan to force everyone into cloud computiong so all your data belongs to corporations and they can do whatever their constantly changing EULAs allow while overriding legal protecations like how a Health Exchange bypasses HIPPA laws and a corporate owned messenger is excluded from wiretapping laws if they sell their data to the agencies.
I wonder if anybody has told Micron about what happens when customers sign a contract but then declare bankruptcy shortly after.
Or what happens to the stock price once the temporary surge in demand fades or new companies enter the market and disrupt it.
That’s the point of the agreement. It locks in that demand by contractually requiring the companies agreeing to it to buy a certain amount of product regardless of whether they actually want it.
Personally, I view this as a sign that Micron believes the AI bubble is going to burst within 5 years, so they’re locking people in at bubble prices now.
Likely they’re just trying to hoard all of the compute in the US despite not producing many of the components, to try to create a substantive gap on AI. DARPA is not used to just being 6 months ahead. But eventually, something’s got to give. If nothing else, China is catching up on chip making.
“Locks in”…if all of a sudden there was no demand you can be assured they would “lock out”. Micron likes to put the boot to the throat when they have an advantage. Not someone I’d do business with.
Yeah, everyone was paying to back out of their contracts as soon as the prices went through the roof. The customers will do the same when they come back down if they are stuck in these contracts.
deleted by creator
Assuming these customers are the reason for the price hikes, their backing out is the demand loss needed to bring prices back down.
Software developers: more Electron and bloated frameworks are what the people want! Running 10 independent browser instances for simple chat apps is a great idea!
I never understood the scale of this bullshit until I had a user request his script packaged. Now, Intune doesn’t like executing random python scripts, so I gave him several options for 8 KB, 50-lines-of-code script.
He disregarded them and wrapped it all in Electron.
I received a 380 MB zip file.
But, well, it had an .exe inside so I could work with that.
¯\_(ツ)_/¯
Isn’t that called price fixing, and is generally illegal?
its price fixing if the agreement is among ‘competitors’ - this is price fixing for a customer(s)
Yes, but the fine is far lower than their profits here… so, it’s only illegal if you can’t afford it.
“Cost of doing business”
Only if regulatory bodies do something about it.
no?
Agreed, it’s obviously not related to that concept. Confusing suggestion.
Wouldn’t this just be selling security?
You would enter the SCA if you want to secure your supply chain against the risk of inflated pricing. The risk would now be overspending if the market drops. Comparing the two risk profiles, an organization might decide that they have more stomach for overpaying a set amount over 5 years. As opposed, of course, to the risk of paying an arbitrarily expensive amount indefinitely as the market remains volatile.
So now, while planning out the next 5 years of business objectives, you can plan against a much more solid best/worst case scenario. That minimized uncertainty, which lets the business keep moving even if at a more expense pace.
Yes, but it’s AI, and Peter Thiel have bought all the politicians he could, so they will let them get away to “gain an advantage against China in AI”.
This is just like selling / buying options in any other industry, e.g farming to buy something at a specified price in the future.
They’ve agreed to buy XYZ product at 123 time at a price between $100 and $200.
If prices plummet, they’ve still agreed to buy it at $100 (similar to selling an options $100 Strike PUT), but if prices skyrocket, they don’t need to pay more than $200 (similar to buying an options $200 Strike CALL)
Anything in between is just the price, so if it’s $150 then its just $150
It’s not exactly the same as using options, but the rough idea.
I’ve never signed a contract to buy something 5 years from now at a certain price.
It’s a real thing.
You’re not a company dealing with massive inventories :P
Unfortunately yes, but the current government is not going to enforce the laws
Five years is too long for the buyers. The AI bubble will burst before then and then the market price will drop as the inflated demand disappears, especially if this continues long enough for more production capacity to come online.
They might not have had much of a choice in making the deal, though. Micron has been extracting the absolute maximum they can out of this situation. Make a deal or get nothing. Their clients will remember, though, and flag them as an unreliable supplier. Once this ends—and these always end—they’ll likely have a lower market share and end up having to cut prices.
Micron is optimistic in saying the demand won’t start easing until 2028. A lot of the rest of the technology manufacturing industry is about to grind to a crawl if not a halt because it’s nearly impossible to get components. Some companies are already delaying product launches and I think a lot more are about to this summer as they realize what’s happening. If non-AI businesses start to slow, the whole economy starts to slow, the AI demand will falter and that’s when the bubble bursts. I’m thinking maybe by the end of this year, more likely next year.
When the bubble bursts I’m guessing at least a couple of the companies Micron signed SCAs with will fold and Micron won’t get anything.
Interesting analysis. I was thinking the same, their customers might not make it.
About this point:
They might not have had much of a choice in making the deal, though. Micron has been extracting the absolute maximum they can out of this situation. Make a deal or get nothing. Their clients will remember, though, and flag them as an unreliable supplier.
Are the other two any better? If not Micron might get away with it. It doesn’t strike me as a very competitive market.
When the bubble bursts I’m guessing at least a couple of the companies Micron signed SCAs with will fold and Micron won’t get anything.
This is the key. The plan for a lot of these companies is that only two outcomes exist, unimaginable success where being gouged hardly matters or just utter failure and the obligations go away in bankruptcy.
Alternatively, they just break the SCA and maybe pay some penalty less than their obligation otherwise would have been. I have seen companies sign agreements knowing up front they will break the agreements, but the contract penalties still make business sense.
I’m still waiting to see what happens when OpenAI decides to back out of some of their purchasing obligations. It’s bound to happen, even if OpenAI does great. If folks think the tech sector is a bit wobbly the past few days, it pales in comparison to what such an announcement would do to the industry.
Padme: “…and then they’ll drop, right?”
Well, I know who’s gonna take a beating when the bubble pops and the market falls out from under them. What a stupid decision.
“Hey guys, this AI thing is gonna be like this forever. We’ll never lack for insane demand ever again.”
I think the logic for the customers is that either: A) It will work out exactly as predicted and we can afford whatever the hell we want, so it’s worth it to have secured supply
B) Declare bankruptcy, the purchasing obligations no longer matter.
They’re all positioning for government bailouts anyway. Whether Trump or a neoliberal lickspittle, they know they’re pretty much covered. All of the important c-suite people will be perfectly fine.
I’m not buying shit unless I have to. And then I’ll likely buy used.
Soooo if you raise the price sooo high then it lowers the price of barriers to entry. Congrats on maybe a year of monopoly before memory becomes a commodity like corn. Or AI crashes so hard that your customers refuse to come back. I feel like the later since using Micron memory for the past 30~ years.
Thus the 5 year contract - even if someone else starts adding supply they still get today’s high prices.
Does it go something like this? Those companies who buy the NAND chips to make AI accelerators, SSDs and RAM for data centers are the Microns customers, like Nvidia. Even if they are in trouble and know that the datacenters are not being built, they can’t cancel the deals because that would call the bubble into question. They will have to take any markup deal that Micron gives, them because if they don’t there will be nothing for them nor Micron anyway.
is there any good reason to charge more? I remember a long time ago, the people who run youtube had to have new technology invented to be able to store the videos on there.
is anything like that happening with ram chips?
Simple supply and demand problem
There are only a small number of RAM chips that are not already bought. If you make computers and want at one of those chips you can get priority if you sign a 5 year contract. They are betting that the supply/demand problems ease and so the price they can get will go down in a year - but you are locked into the high price for 4 more years. If prices go up even more you get a great deal, if prices go down you lose - make your bets, but remember this bet also comes with supply today and so you may not have a choice.
