[aurareturn]

Bankruptcy risks.

When Samsung had to sell memory at a loss after COVID, no one came to save them. They buffered their memory division using profits from their other businesses. That’s how Samsung survives memory downturns.

According to some stories, this is how Samsung convinced TSMC to not enter the memory business - that you need a nation or other lines of business to prevent bankruptcies.

The market has stabilized to 3 players.

[dymk]

...And why do they go bankrupt?

Because it's an incredibly capital intensive process, involving billions of dollars of investment into manufacturing infrastructure.

That is to say, making memory is quite hard.

[imtringued]

Making memory is easy in the sense that any company that makes JEDEC compliant DDR5 can sell you their product and you can put it into your mainboard (soldered or not).

You can't do that with Intel or AMD CPUs. There is no spec. Each vendor does CPU socketing and chipsets in their own unique way.

Not to mention that your design needs to be good. For DRAM manufacturers, they just need to design one really good cell design and spam it a billion times.

The problem is that DRAM is a specialised product that has a specialized process. Your fab is a one trick pony that can't take advantage of other markets. Since you're stuck with fixed costs on a single design, you're cranking up the volume to make your money back, but everyone does that and if everyone does it, then the market is flooded with cheap memory that won't recoup the costs.

Now that AI memory is something the companies can specialise in to increase the margins, they can exit the contested market with low differentiation. If anything, they will prefer it of a single company is left doing consumer DRAM, because it is one less company in the AI memory space.

[kortilla]

You’re confusing two independent things. There are simple processes that are extremely capital intensive with long lead times and then there are complex processes that require lots of R&D and industry secrets. Memory is the former in the chip world.

Other examples from outside of tech of easy but capital intensive processes are power generation and railroads. Very easy to do, but easy to end up broken by overbuilding for demand that fails to materialize or stay stable for the duration of your financing.

[aurareturn]

The technical process of making memory is relatively easy. Hence, it is a commodity.

I didn’t say owning a memory business is easy.