this post was submitted on 21 Jan 2024
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Demand is way down, so they raise prices. This is the cycle that keeps repeating, and nobody should be surprised.
That's.... thats's not how this works.
It's exactly how this works, and during a quarterly review with Samsung, they literally told me they were doing this. Nobody in the industry is surprised by this.
Not sure why you'd deny what you literally see happening.
It shouldn't (edited) matter if the rise the prices. Nobody's buying, right?
What?
Typo...
Ok. Well, people are buying all the production. But production is down. And they control the price so they raised that too.
Welcome to free market capitalism.
You are free to open a competing fab!
I'm not the one complaining
You are free to do so nevertheless!
The only claim in this thread that demand is down is from you. When demand is already low, prices going up makes no sense.
This is not to say that someone wouldn't do it anyways, but then there's also Erdoğan who lowered interests to "combat inflation" against advice of his central bankers, whom he fired. Then inflation becomes worse and surprised Pikachu face ensues
I have information directly from the three main manufacturers. Demand is down, production is down, so in order to not show losses on the balance sheet prices went up.
TSMC did the same thing last year- raised prices by around 27% for all customers. Because demand is way, WAY down. Sadly their increase wasn't enough to stave off a drop in revenue.
When you have the whole market cornered, normal supply and demand economics don't apply.
Do they have a captive audience for those who still have a demand? I can understand "look, if we have to keep the production lines going to provide you with required hardware, of which we are not selling as much as we used to, we have to raise prices" - but if the customers who still buy are flexible, this would only mean even less people buy.
Customers are fairly inflexible. If you need storage or ram for 10k new servers, that's it. You have to have it. And since all manufacturers raised prices, you're going to spend more. Making matters worse, if you have to onboard another vendor to safe a few tens of thousands of dollars, you can easily spend hundreds of thousands on time and resources to go through a qualification cycle alone.
Home computers make up a significantly smaller portion of the computer component space. So while this might prevent a person from upgrading their SSD or building a DDR 5 equipped gaming computer, that's small percentages of sales. A single corporate relationship account will buy thousands of devices at a time, larger accounts will buy tens of hundreds of thousands. A cloud operator building 10k servers with 12 channels of RAM will buy 24 dimms per server. It's a totally different game.
In principal I would say "fair enough", except that for cloud operators, the service prices would also probably increase, possibly leading to less end user demand for cloud space. Anyways, your point is well constructed, I concede ;) Although the logic "less customers, therefore let's raise prices" would drive a lot of vendors into bankrupcy.
They also drastically cut supply.
By cut supply, you mean several fabs have suffered catastrophic losses and turned down production for nearly a year? Because that's what happened.
And yes, nobody makes products when there's no demand for them. It's the basics of how they turn the screws to buyers at all times.
They cut supply in like September. They were all fighting for market share still, largely driven by Samsung, hence the low prices.
Server shipments were way down because everyone overbought in 2021/2022.
The NAND market has always been an antitrust shit show.
Yup. They control the entire market and there's a decreasing number of fabs. They raise prices to ensure revenue doesn't drop and they can keep showing investors lines going up.
It's idiotic, and it's how the industry has worked for decades at this point. Just wait till people figure out the games played by fabs, substrate manufacturers, and component suppliers...