[prmoustache]

You don't want to build a huge factory if you believe the market might deflate suddently.

A lot of industries got bitten by greed and the sudden deflation of demand and huge unsold inventory post COVID. The reality is the market was overly and abnormaly inflated and consumers who bought the stuff during COVID period were equipped for the next ~10 years in stuff like sporting goods and had no reason to buy new items in the subsequent years.

I do believe we will always need more RAM even if there is a market correction or AI bubble burst whatever you want to call it. It will not destroy AI completely, just cleanup the market. But how much will we need? I guess the chip makers makes their own guesses but don't want to make their company in peril either.

[johnvanommen]

> A lot of industries got bitten by greed and the sudden deflation of demand and huge unsold inventory post COVID.

I’m betting that the world is about to hit a wall of inflation.

https://i.ibb.co/s9Mm8w2r/IMG-0743.jpg

This is a graph I made.

It shows:

* the inflation rate from 1971 until 1991

* the inflation rate from the start of COVID 19 until today.

Does anyone notice anything interesting about the graph?

[dehrmann]

> Does anyone notice anything interesting about the graph?

Cherrypicked dates? But I'd like to hear analysis comparing the Nixon shock to the covid shock since one was monetary and one was supply and demand.

[johnvanommen]

> Cherrypicked dates? But I'd like to hear analysis comparing the Nixon shock to the covid shock since one was monetary and one was supply and demand.

Of course!

* In 1971 and 2019, the M2 money supply was flooded. In 1971 by the Nixon Shock, in 2019 by Covid: The amount of US dollars that existed between 1961 and 1971 increased by 100%, the amount of US dollars that existed between 1971 and 1981 increased by 253%. Assets are denominated in dollars and the flood of money that the Nixon Shock caused led to the inflation of the late 70s and 80s. The flood of money that Covid caused led to the inflation of the last six years, 2022 in particular.

* The other factor that contributed was the lack of oil supply. In the 1970s, it was caused by a war in the Middle east. Will we see history repeat again? My bet is yes.

Data: https://fred.stlouisfed.org/series/M2SL

Note that the Fed data is difficult to read in the 70s, you'll want to play around with the length of the time window. It's difficult to read because the supply of money has grown so much.

[Jblx2]

You can tell that a chart is authoritative when it economizes on pixels?

[frollogaston]

But they are building huge datacenters for AI. The investment appetite is there. So there must be some worse bottleneck when it comes to memory itself.

[prmoustache]

The one building the datacenters aren't the ones making the chips. A construction of a datacenter can be halted suddently and an order of chips cancelled. We might assume that the chip makers are ready to supply said datacenters, just they don't necessarily feel necessary to build new factories for the consumer market which itself might not be ready to spend the same amount of money on RAM chips. And building factories do not magically create price reduction, quite the contrary. The consumers buying $150-200 smartphones aren't necessarily ready to buy $400 ones. Most would just buy on the second hand market and replace less often their phones instead.

Whales being whales, they will pay the highest end iphone at any price, no question. But the market is not made entirely of whales.

[ErneX]

Exactly, and this isn’t the 1st time this happens. Some companies disappeared years ago due to overcapacity when prices went down.

[cryo32]

And that’s exactly what it’s going to do because the dependency chain on actually using this RAM is unlikely to succeed.