For decades now we have seen the expectations that software businesses (and in particular FANGs) have pushed any hardware margnins to be more and more like commodities, while they were extracting all the value.
Because software you build it once and can resell it as much as you want, a stick of RAM is only sold once.
> The same was reflected in engineering salaries, with software engineering salaries being often a multiple of hardware engineering ones.
Arguably software is much more difficult to build because it is never complete.
Yes exactly, and theoretically if there was a functioning market that should have driven prices way down, because the marginal cost to enter the market is so low. However, the non-functioning anti-trust laws as well as the expansion of ip laws as allowed a few enormous corporations to essentially control the market and keep prices up.
> Arguably software is much more difficult to build because it is never complete.
There are hardly any hardware companies where the hardware is ever complete. Disregarding the fact that many hardware products contain some form of software that needs to be updated. In pretty much any field hardware companies need to continue developing new revisions/improvements on the hardware to stay ahead of their competitors, however those revisions/improvements are significantly more complex to put into reality.
Decades ago, when memory production still existed in many countries, no such margin increases would have been possible.
Even now, this would not have been possible without the US government actively suppressing competition in the memory market, by sabotaging the Chinese memory producers.
The so-called "sanctions" against the Chinese memory producers have started some years ago precisely in the moment when Micron was threatened to lose market share to the Chinese producers (e.g. when Apple was considering to switch to them as providers). Based on the "Cui prodest?" principle, it is extremely likely that Micron was the entity who lobbied the US government to sabotage the Chinese memory producers, creating the environment where companies like OpenAI could successfully drive the memory prices to record levels.
And software isn't?
They know that as new factories come online the current shortage will be resolved and their pricing power will disappear. I was equally critical when Microsoft used these types of contractual provisions.
So clearly 16 large buyers consider it likely that prices will go even higher. How likely? >10% chance? Likely enough to sign an agreement.
Turns out Apple fucked Micron in 2023 so they couldn't expand capacity: https://9to5mac.com/2026/06/25/micron-exec-suggests-apples-a...
Doubt it. Has it EVER happened before?
Just don't buy consumer electronics for the next 3 years. You might even be able to buy a non-smart TV in the near future because of RAM prices!
[0] can actually be anyone
if the chinese DRAM is any good, prices should start stabilizing... I wouldn't get my hopes up too high on them going back to the before times level anytime soon, however.
> To date, five manufacturers have pleaded guilty to their involvement in an international price-fixing conspiracy between July 1, 1998, and June 15, 2002, including Hynix, Infineon, Micron Technology, Samsung, and Elpida.
It is history; we have not learned; we are doomed to repeat it.
By giving them stability of cash flows, the AI companies are enabling them to make those investments and to ramp up production. That's a good thing, not a bad thing. Over time it should ease the squeeze on chips.
