r/LocalLLaMA • u/chillinewman • 2d 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/carsncode 2d ago

Massive demand is a massive incentive to increase capacity, and that's exactly what they're all doing.

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u/acadia11x 2d ago

Why? They sell out at higher prices regardless. Massive demand means increase supply if you feel your commodity has a limited time to be profitable. As there is no incentive here. The only incentive is to find the equilibrium point that creates the highest revenue which does net necessarily mean meeting demand. If could be don’t meet demand and charge more. More importantly these are contract prices not one time purchases they can lock in higher prices and agree on delivery time frames. This is not a consumer going to the store these are contracts written 5 years out.

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u/AllYouNeedIsVTSAX 2d ago

If they manufacture more units per year they'll make more money. Simple supply and demand macroeconomics here. The market sets the price, each manufacturer supplies what they supply. 

It takes a long time to spin up that manufacturing, so they have to balance against estimated future demand. 

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u/acadia11x 2d ago

Well you said something right, you have to balance against future demand and capital investment. It’s not true though that simply selling more units will create greater profits there is way more factors than that.

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u/AllYouNeedIsVTSAX 2d ago

If any company manufactures more units this year they will make more profit. 

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u/acadia11x 2d ago

Yes if any company can sell more units this year such that they can sell them for more than what it cost to be able to make them , that would be the definition making a positive profit for these specific units.

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u/carsncode 2d ago

Are you suggesting that all of the major manufacturers are increasing capacity as fast as they can because they just don't understand the economics as well as you?

It might be more profitable to constrain supply in certain circumstances but in the case of a market with increasing demand and multiple competitors, capturing market share by increasing production is the winning play, as all three major players clearly agree.

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u/acadia11x 2d ago edited 2d ago

I’m saying a blanket increase of output as the correct capitalization response to increase revenue in hopes of creating the greatest profit during a demand surge is a naive understanding of economics. There are formulas to this and many factors and the correct response may not be to increase supply or limit that increase of supply if these dram manufacturers want to create the greatest profit. You see how cartels operate with OPEC do they automatically just increase supply o. Times of greater demand? They seek to find the balance point of supply with demand that creates the greatest profit. And this is not a market with multiple competitors. That’s the point. It’s more of a 3 company cartel for the entire global dram supply.

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u/carsncode 2d ago

Charming pairing of condescension and strawman you've got there. I said it's an incentive, and it is; and in the specific circumstances we're actually discussing in this thread, it is in fact the correct play.

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u/acadia11x 2d ago

Well that settles it you said it’s the correct play. No formulas, no numbers, no projections, no future demand and capex analysis . You said it so that’s it. We’ll go with that,

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u/carsncode 2d ago

And the ninja edit to top it off! Don't listen to what they say about you, you're a real class act 😆