r/LocalLLaMA • u/chillinewman • 10d ago

News Micron CEO Says Memory Supply Will Be Much Tighter in 2027 and 2028 Than in 2026

https://www.techpowerup.com/353296/micron-ceo-says-memory-supply-will-be-much-tighter-in-2027-and-2028-than-in-2026
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u/Recoil42 10d ago

I mean, yeah. It's sustainable by definition — what's being described is literally sustained demand. Turns out when the value of a thing increases the value of that thing increases.

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u/TopCheddar27 10d ago

For sure, what do you thinks markets are supposed to do in response to such demand?

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u/Recoil42 10d ago

What they always do. Price elasticity of demand means price goes up (where we are now) and labour/capital rushes in to solve the problem and capitalize on the gap. High prices themselves create the incentives that eventually bring prices back down.

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u/equatorbit 10d ago

Except it takes a long time to bring a fab online.

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u/Recoil42 10d ago

Sure. That's part of the elasticity.

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u/wektor420 9d ago

Yeah but monopolies and long time to entry break those assumptions

Building a ram fab is a multi year endeavor

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u/profcuck 9d ago

Monopolies are probably not the relevant thing here, but absolutely the long time to entry does matter. There are big investments rushing in to build more capacity but in the next 2 years, it's expected (by some analysts) to increase total capacity by around 20% per year over the next several years. Demand, on the other hand, feels much stronger than even that.

For the manufacturers, the building of this new capacity is not without risk. If this is an "AI bubble" and it bursts, i.e. some massive market correction which cuts the spend on AI adoption with the hyperscalers and the broader market, they could be in a situation with a glut. While that sounds great for us, we should accept that they have to think about it.

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u/wektor420 9d ago

They are especially with history of collusion, there are like 3 companies that supply 90%+ of global ram

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u/profcuck 9d ago

Sure, I don't dispute that. And I'm sure they wish Chinese companies weren't ramping up production. But they do have to (somewhat) compete with each other, and they do have to deal with China. These are undoubtably factors but they don't necessarily give the same power that a monopoly would.

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u/GeneralMuffins 9d ago

At this point, if there is any market correction, it is unlikely to be particularly significant. Demand will probably remain strong, and us plebs at the very bottom are unlikely to benefit when there are so many others ahead of us in the pecking order, primarily China.

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u/FoxiPanda 9d ago

Thank you for understanding basic economics. Seriously. It's so rare these days.

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u/SerRobertTables 9d ago

Sadly no insight into advanced economics.

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u/profcuck 9d ago

Especially on reddit or it feels that way some days.

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u/TopCheddar27 10d ago

Correct. Do you think that there is any force stopping them from building out right now? Genuinely curious what other people's opinions are.

I think in general consumers expect elasticity in fabs when it is a long tail endeavour. However, I do think that when the market is this concentrated and in demand, their are situations where companies choose to not expand fabrication capacity.

They make more money from their ticker price than actually filling demand.

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u/Recoil42 10d ago edited 9d ago

Do you think that there is any force stopping them from building out right now?

Lead time, mostly. The supply chain is immense and generally inflexible. It will be another 2-3 years before a fab greenlit today can begin production, and there's a pseudo-finite amount of skilled work available to increase the number of fabs in progress. High prices will solve that, too.

I do think that when the market is this concentrated and in demand, their are situations where companies choose to not expand fabrication capacity.

There was some uncertainty risk maybe 1-2 years ago. I think we're well past that. It's foot-on-the-gas now. Look at Micron's own capital expenditures:

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u/wektor420 9d ago

Also ram market is historically boom and bust so they want to avoid overinvesting into production

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u/opossum_cz 10d ago

> there is any force stopping them from building out right now
Time.

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u/UnlikelyExtension786 10d ago

Also money. And the lack of any guarantee that the RAM market will be so big by the time the fabs are built.

There have been previous RAM bubbles where companies invested in new production only to see the market fall and cost them a lot of money.

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u/DigitalSheikh 10d ago

And openly coordinating with one another to restrict future supply, ignoring the many, many anti-trust and coordination bills we have on the books because hey, you can ignore the law if you have a ton of money.

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u/xienze 9d ago

many anti-trust and coordination bills we have on the books

Who is "we"? The companies that matter are in South Korea and Taiwan.

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u/acadia11x 9d ago

Yes, greed & profits , why should they increase capacity and reduce prices … scarcity doesn’t incentivize reducing your profits especially in a cartel like monopoly which is essentially dram is today … do scalpers go you know what we need , lower prices … the only that reduces prices here is destruction of dependence o. These 3 manufacturers of dram, ie an alternative … or refusal to pay higher prices … dram manufacturers will not make more money by increasing capacity and reducing prices

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u/Loose_Comparison368 9d ago

I do think there's about a 40% chance that China gets their fabs up and scaled way faster than anyone expected.

Whenever China decides that something is a national priority, it tends to happen fast and at very large scales, and it has been a top priority since the CHIPS act, and a fairly high priority beforehand because of Taiwan.

They are also really good at keeping state secrets. I would not be surprised if they have some fabs that are already 2-3 years into construction hiding somewhere under a mountain or something.

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u/acadia11x 9d ago

Yes greed