DRAM prices are spiking, but I don't trust the industry's why

> then during spikes in demand (or alleged spikes in demand) they coordinate to keep the price from dropping.

Why would they need to coordinate to keep the price from dropping during a spike in demand? a spike in demand will obviously not be expected to lower prices regardless of collusion

If there are a small number of sellers and barriers to entry are high, we should expect at the bare minimum "tacit collusion":

https://en.wikipedia.org/wiki/Tacit_collusion

> Following the plea agreement he was sentenced to 8 months in prison and fined US$250,000.[6] Lee was subsequently promoted to President of Samsung Germany in 2009, and then President of Samsung Europe in 2014.

Lmao he got rewarded for taking the fall.

If demand is high and supply is fixed (generally the case) you can also pull a DeBeers, grab everyone by the balls, and charge 3x (or more) the already high prices everyone would already get when you sell out your inventory.

Fundamentally because demand and supply curves are lagged. This drives DRAM flood and drought cycles. Right now high DRAM prices are driving fab investment up and demand down. In 3-5 years new fabs will cause DRAM glut that will drive prices down. Lower prices will stimulate demand via things like doubling DRAM size in consumer electronics as companies compete on getting the number bigger. Eventually demand curve will eclipse the supply and we will end up in the DRAM drought again.

This time things are further complicated by the fact that the world is investing a sizable chunk of GDP into building RAM hungry data centers in hopes of building a god which will convert the rest of the world into data centers.

I've heard it was Sam Altman and OpenAI basically buying every wafer available from both Samsung and SKHynix at the start of October.

Neither company know of the other purchase until it was a done deal.

It didn't triple overnight. Contracts for 2026-2027+ hyperscaler orders get negotiated gradually over time and when those contracts are N% higher than last year, ~all supply is spoken for.

Maybe Some nerds joked at lunch that if we hoard all the RAM we cut it off from competitors. They saw what COVID did to supply chains and thought they’d be so smart if they could simulate it.

> Why is demand extremely high...

Data Center projects that were announced a couple months ago are now beginning to be built out.

Additionally, there have been some supply chain issues the past few years due to trade wars between the US, SK, and China [0], along with the earthquake that hit Taiwan last year [1].

Generally, you feel the pain of supply chain issues within 6-18 months of the initial incident, which is where we are now at because stockpiles have been reduced significantly.

[0] - https://www.digitimes.com/news/a20230310PD204/chip-war-memor...

[1] - https://www.reuters.com/technology/micron-flags-hit-its-dram...

People pulling their heads out of their ass as to how to actually deploy these systems at scale (AKA to do this effectively, you need to do more than just throw pallets of GPU's at it, such as properly considering Topologies of both NVMe-over-Fabric and PCIe roots/lanes [0]) combined with advances in various technologies (eg RDMA, CXL, cuDF/BaM/GPUD2S/etc) that meaningfully enhance how system ram can be integrated and leveraged are a big part of it.

Also we're hitting that 5 years after DDR5 being readily available which means that a lot of existing enterprise hardware that was on DDR4 is going EOL and being replaced with DDR5 which, given many platforms these days have many more channels available than previously, results in more DRAM being bought than was previously used per node and in total. A lot of enterprise was still buying new DDR4 into 2023 as it was a more affordable way to deploy systems with lots of PCIe lanes which was more important than any the costs associated with the performance gain from DDR5 or related CPU's. (Also, early days DDR5 wasn't really any faster than DDR4 with how loose the timing was unless you were willing to pay a BIG premium)

Regarding the hype of the day: AI specifically, part of it is the rise of wrappers and agents and inference in general that can run on CPU's/leverage system ram. These usecases aren't as sensitive to latency as the training side of things as the network latency from the remote user to the datacenter means latency hits due to hitting the CPU ringbus(infinity fabric, QPI, whatever you want to call it) results in a much less significant share over the overall overhead, and the cost/benefit/availability concerns there has also increased the demand for non-GPU AI compute and RAM.

I wouldn't rule out corruption/price fixing (They've done it before) but I have no evidence of this. Wouldn't surprise me, but I don't think this is it (unless this problem persists for several quarters/years)

There's some geopolitics and FOMO (Corporate keeping up with the joneses) and economics that goes into this as well but I can't really speculate on that specifically, that's not really my area of expertise. Suffice to say, it's kind of like a bank run where it's not so much that the demand itself hit the curve of the hockey stick, but it was gradually increasing until it hit a threshold that was starting to cause delays in delivery/deployments. Given how important many companies view being on the cutting edge here, this lead to sudden spike in volume customers willing to pay premiums for early delivery to hit deployment deadlines, artificially inflating demand and further constraining supply, which just fed back into that feedback loop pushing transient demand even higher.

0: Yes NVMe NAND flash is different than DRAM flash, but the systems/clusters that host the NVMe JBOD's tend to use lots of sysRAM for their index/metadata/"superhot" data layer (think memcached, Redis, the MDS nodes for Lustre, etc), and with the advent of CXL and SCM you can deploy even more DRAM to a cluster/fabric than what is strictly presented by the CPU/mobo's memory controllers/channels. This is not driving overall market volume, but is a source of fierce competition for supply at the very "top" of the DRAM/Flash market.

TL;DR: Convergence of a lot of things driving demand.

"OMEC" (Organization of Memory Exporting Countries) NAND production quotas? https://x.com/jukanlosreve/status/1988505115339436423

> Samsung Electronics has lowered its target for NAND wafer output this year to around 4.72 million sheets, about 7% down from the previous year's 5.07 million. Kioxia also adjusted its output from 4.80 million last year to 4.69 million this year.. SK hynix and Micron are likewise keeping output conservatively constrained in a bid to benefit from higher prices. SK hynix's NAND output fell about 10%, from 2.01 million sheets last year to around 1.80 million this year. Micron's situation is similar: it is maintaining production at Fab 7 in Singapore—its largest NAND production base—in the low 300,000-sheet range, keeping a conservative supply posture.

China YMTC (sanctioned by US) and CXMT are increasing production capacity.

That wikipedia page only shows one settlement. The other got dismissed.

There were also dumping controversies in the 1980s. Who knows that may even be where Trump got his crazy tarrif fetish from.

If I can get that right now $389 retail is there an arb opportunity (not in US, but maybe you are getting fucked on tariffs? Could that be the difference?)