Micron locks in historically high memory prices for five years(www.theregister.com)
38 pointsby fauigerzigerk2 hours ago7 comments
  • londons_explore3 minutes ago
    There is a futures market for DRAM and NAND for exactly this purpose.

    Why not just sell on the open market, and let traders and financiers and all their prediction models give you the best possible price?

  • alxfrnr14 minutes ago
    "consolidated gross margin came in at 84.9 percent"

    They are in saas metrics territory in terms of margins, this is insane.

  • nok22kon6 minutes ago
    This is Capitalism working as intended - resources (RAM) are allocated to those which can extract most value from them (AI labs)
  • try-workingan hour ago
    wishful thinking from MU holders. These LTAs or SCAs are just hedges on the prices going even higher. Once spot prices start dropping, all of the agreements will be broken in a millisecond. The break up fees have already been paid! There's absolutely nothing the buyer has to do, but to simply not buy at the inflated old price and instead buy from someone else at the new, lower price.

    Does anyone really think that there is any agreement in the world that will keep companies paying $1000 for a product priced at $20 on the market? The larger the gap the larger the incentiv to break the agreement.

    • wjncan hour ago
      I think you are right but would like to keep in consideration that penalty clauses are real and can be enforced in court. We have no (or perhaps: have some) clue how far the bargaining power is leaning toward the suppliers. Maybe the signatories in the SCA are so cornered, they will sign anything and think ‘boom or bust’.
    • cm218734 minutes ago
      The article says a large part is paid upfront.
  • digitaltrees2 hours ago
    Predatory. I hope the tech community remembers this and diversifies away from companies that behave this way
    • naturalmovement2 hours ago
      Yeah they're going to diversify... to one of the other two memory companies who will likely be raising their prices too, because why should they be suckers?
      • small_modelan hour ago
        The suckers are those companies agreeing to this deal. 'Your margin is my opportunity' means prices will fall eventually once more production come on line. The invisible hand will slap their faces
        • regularfry33 minutes ago
          "Eventually" doing a lot of work. Micron (and implicitly anyone signing this deal) are betting demand is going to outstrip capacity for several years, taking into account what new capacity can be brought online and when.
        • rob7418 minutes ago
          Well, apparently those companies believe memory prices will continue to rise, so they'd better lock in supply at the current (high) prices. We'll see if they're right...
        • try-workingan hour ago
          nobody is agreeing to what the headline says. the SCAs are just a hedge against even higher prices. the agreements will be broken the second prices drop.
    • striking38 minutes ago
      https://en.wikipedia.org/wiki/DRAM_price_fixing_scandal

      > 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.

    • baq32 minutes ago
      waiting for you[0] to lay the $10B on the table for a new DDR fab - there's only so long I can wait for a new PC for the kids

      [0] can actually be anyone

    • cm218732 minutes ago
      Why? Part of the problem is that chip manufacturers (from tsmc to to memory makers) are reluctant to ramp up production as the AI bubble may pop and they would find themselves with huge over capacity, a scenario they have gone through many times.

      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.

    • baal80spaman hour ago
      > I hope the tech community remembers this and diversifies away

      Doubt it. Has it EVER happened before?

      • dygd32 minutes ago
        It feels different this time. I bet there will be a generation of PC enthusiasts that are going to remember Crucial exiting the consumer market to chase AI dollars. And similar, when they hear Micron/Samsung/Sk Hynix, they'd be wary of the price gouging. Gamer's Nexus is doing really good job exposing the DRAM cartel.

        https://www.youtube.com/watch?v=jVzeHTlWIDY

        • cm218710 minutes ago
          PC enthusiasts aren't exactly sentimental when in front of a spec sheet and a price list. Plus where else are you going to go. All manufacturers are hiking up their margin if you believe their stock prices.
        • zarzavat12 minutes ago
          What are they going to do about it? Start their own DRAM fab?
  • alentredan hour ago
    That's ... just sad.