[zettabomb]

The entire capacity of RAM production is basically booked out, for at least the next year. All fabs have sold their allocations already, and it takes years to build a new one. As a result, no it will likely not ease up if demand continues like this, again for at least a year.

[lenerdenator]

Also worth noting:

They sold their allocations to people who don't have a clear path to profitability, and were paid with massive amounts of money that don't exist in reality.

[root9876]

> and were paid with massive amounts of money that don't exist in reality

How's that possible?

[kuschku]

You know how fractional reserve banking can create money out of thin air? In theory, the stock market can be used in the same way. Which is what the AI providers have been doing.

[chadgpt3]

I agree to pay you within 90 days of receiving the product, which you'll send me in 6 months. You get to count this promise as income i've paid you right now. 9 months later I might or might not have the money to pay it for real.

The principle works for stable regular businesses where invoices do get paid, not for bubbles.

[lenerdenator]

I'd argue the opposite: It works even better for bubbles.

Stable, regular businesses generally don't take on massive amounts of debt as a matter of accomplishing their value proposition. Maybe they take on the debt as a part of an expansion into a new geographic market or on developing a new product, but they typically have cash reserves to help fund those things. Accordingly the debts are relatively small and there's at least some collateral to secure them.

Any kind of bubble, on the other hand, is, by definition, financially massive. People taking on debts take on huge debts with the hopes of huge rewards. The problem is, the debts are so huge that neither the debtor nor creditor can allow them to go unpaid.

When you reach the scale of debt that you see for AI - literally trillions of dollars - the creditor isn't just a bank or a few investors, they're entire segments of the economy. The debtors can use that as leverage to get what they want. The Great Recession is a prime example of this. You had the US government print out or borrow $700 billion-ish dollars to absolve financial institutions of the toxic mortgage-backed securities on their balance sheets. Now, could they have simply declared bankruptcy and had the assets on their balance sheets claimed by other parties? Maybe, but that would have taken too long for most people's comfort and, moreover, would have been embarrassing for the country's monied elite. There had to be a bailout to keep a bunch of things solvent in the near-term, and they got one.

You could see this here: AI companies have everyone on the hook for their bets, and if it doesn't work, you can't simply write off the value of shares of everyone who has backed the bet.

They're too big to fail. If you owe the bank $1 million, you have a problem. If you owe the economy $1 trillion, the economy has a problem.

[lenerdenator]

Credit.