Sam Altman's Dirty DRAM Deal

> This was not the "free and global market" I thought we were supposed to have at this point.

Perhaps you haven't noticed but the pendulum has been swinging the other way for a while already and has a lot of momentum behind it. It's mentioned off-hand because the ongoing return to a multi-polar global order is covered elsewhere already, across dozens of articles every day.

Err… is there any question that the US is trying to slow down China’s high-tech computer development? I thought that was our open goal.

Countries decided the extent to which they’d like to engage in free trade together. It is a knob that we’d hope our leaders would turn strategically. (Regardless of whether or not we think our leaders actually are doing a good job of it…).

We left behind any pretense of a free global market once we entered a post-tariff world. You can't have large universal tariffs or even the threat of them and expect the market to act freely, the two are fundamentally incompatible.

What free market?

I don't think you can have a "free and global market" when countries participate in large-scale state industrial policy. Given those constraints, you have to either enforce a zero-subsidy environment (the US has no power to do this) or you have to accept that trade control is one arm of your foreign policy goals and surrendering it entirely is unlikely to help your aims.

For the most part, free and open trade is beneficial to the Western world order. But I think it's quite straightforward to imagine conditions under which it is not, many of which are currently in effect.

US control of EUV technology is probably the most obvious present one, but limitations on nuclear proliferation are an obvious case where there is no free market. Even selling civilian nuclear technology is controlled.

You may think of it analogously to Free Speech. The dream is complete and total expression. The reality is that if you allow convincing enough liars, your society starts to falter. Consequently, certain kinds of expression are not permitted - notably defamation. Think of it as more a North Star navigation ideal constrained by the trade winds (I suppose the Westerlies would be more relevant, but I couldn't resist the pun).

If you want a couple of reads, I enjoyed A Splendid Exchange about the history of trade, which I followed by the resurgent-though-once-dismissed Zeihan's Disunited Nations (which is more a hypothesis book than a history book).

As in producers not over-producing RAM should be illegal? A presumably short-term price spike in RAM of all things is a non-issue. It is a luxury good that only a very small number of people care about and there is no reason to think this blip is going to last. Apple did stuff like this all the time at their high point in the late 2000s and early 2010s, and it would happen often in other markets. The world is not static and sometimes the situation changes and lots of supply is soaked up.

Seems like it is, but the question is whether the current Justice Department will do anything about it.

> Moves like this should be illegal.

Should be, as in, new legislation should criminalize it? What's the generalized principle? Or should be, as in existing law should cover it? And if so, what law / how?

china does this all the time fyi

Guys, these are silicon wafers not bars of steel. You can't just stockpile 40% of annual capacity in a warehouse long-term. I would be incredibly surprised to find that any such large scale storage facility exists. Any storage of undiced wafers is temporary while the manufacturing pipeline proceeds. You've seen the pictures of clean rooms and stuff. There's no way you spend all that effort to make the wafer and then just stick it in a warehouse. Who even is going to make such a large cleanroom facility? And for what exactly? It doesn't even pass the basic sniff test.

Much more likely this is just a detail of the contract so that OpenAI can guarantee allocation. I would be surprised if the actual wafers entered OpenAI hands before being fully packaged.

Maybe they’ll build nice little forts with the wafers

Yup. Not exactly a move "for the good of the world".

Also consider:

Warehouses of small, high-value items that are fungible and untraceable.

That will create multiple huge targets for a big heist. And they'd best have good eyes on their security people too.

Sounds like something big enough for organized crime to target.

It's bad for consumers period. A deal that hampers 40% of global supply shouldn't be a thing, it's predatory. I know DRAM is not a necessity, but considering that PCs are going to be affected means this affects real things like schools and hospitals. There's being smart while making a deal and there's knee-capping the market with your leveraged to the tits business

> OpenAI isn’t even bothering to buy finished memory modules! No, their deals are unprecedentedly only for raw wafers — uncut, unfinished, and not even allocated to a specific DRAM standard yet. It’s not even clear if they have decided yet on how or when they will finish them into RAM sticks or HBM! Right now it seems like these wafers will just be stockpiled in warehouses

That is not "totally normal".

What they mean is that they bought 40% of all RAM production, they managed to do that by simultaneously making two big deals at the same time. It's buying up 40% of all RAM production with the intention to have most of it idle in warehouses that is "dirty". And in order to be able to do that, they needed to be secretive and time two big deals at the same time.

That's not the dirty part. This is the dirty part:

> OpenAI isn’t even bothering to buy finished memory modules! No, their deals are unprecedentedly only for raw wafers — uncut, unfinished, and not even allocated to a specific DRAM standard yet. It’s not even clear if they have decided yet on how or when they will finish them into RAM sticks or HBM! Right now it seems like these wafers will just be stockpiled in warehouses

That $7 trillion number makes more sense now.

I found this which claims ram market in 2024 was almost 100 billion: https://www.grandviewresearch.com/industry-analysis/random-a...

I assume this includes more than just the raw price of modules but Openai only has 60 billion in funding altogether and was aiming for 20 billion ARR this year. This sounds like they are spending maybe half their money on RAM they never use? That just doesn't add up.

I have a nice little house in Spain, I'm willing to trade it for 128GB of RDIMM DDR5.

One of the big problems here is that all of the hardware companies have been burned by hype before (e.g. crypto). No one actually believes that these AI companies will still be around in 5 years so spending billions to build factories for them doesn't make sense.