Comment on Western Digital Has No More HDD Capacity Left, as CEO Reveals Massive AI Deals; Brace Yourself For Price Surges Ahead!

BlackEco@lemmy.blackeco.com ⁨3⁩ ⁨weeks⁩ ago

• tal@lemmy.today ⁨3⁩ ⁨weeks⁩ ago

  On hardware costs, if it produces a large, sustained amount of demand, and if there are fixed costs (e.g. R&D) that can be shared between hardware used for it and other things, it may substantially reduce hardware prices in the long run for other users.

  Suppose, to take an example, that there is demand for, oh, completely pulling a number out of the air, 4 times the amount of high bandwidth memory for AI that there is for 3D video cards and video game consoles. That’s on a sustained basis, not just our initial AI buildout. There is going to be some amount of fixed costs that have to be done at Micron and Samsung and the like to figure out how to design and optimize production costs.

  That’s going to mean that AI users likely pay something like 80% of the fixed costs for HBM, which may very well lower costs for other users of HBM.

  In late 2025 and 2026 there is a huge surge in demand for hardware. There’s a shortage of hardware, and factories don’t get built out overnight. So prices skyrocket, pricing out many users to the point where demand at the new price point matches the available supply. But as production capacity increases, that will also ease.

  I do get that it’s frustrating if someone wants to build a system right now.

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  • OopsAllEarios@lemmy.world ⁨3⁩ ⁨weeks⁩ ago

    I get what you’re saying, but weren’t big manufacturers committing to NOT expand production capacities? I can’t remember where I read it, but it felt more like they were just gonna hedge their bets and not build out in the near term.

    Not to mention, this all sounds and looks like commitments and not actual orders. It just feels like they’re all playing with imaginary money and when the AI bubble bursts, and all those commitments up and disappear like a fart in the wind, those benefits of scale are also going to disappear and the prices will just stay high.

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    • Khanzarate@lemmy.world ⁨3⁩ ⁨weeks⁩ ago

      No, they’re definitely also expanding.

      Not all of them, certainly, but there are a few plans for new factories. Samsung, for instance, is rolling out a new chip factory, if you want something to search.

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  • mic_check_one_two@lemmy.dbzer0.com ⁨3⁩ ⁨weeks⁩ ago

    In late 2025 and 2026 there is a huge surge in demand for hardware. There’s a shortage of hardware, and factories don’t get built out overnight. So prices skyrocket, pricing out many users to the point where demand at the new price point matches the available supply. But as production capacity increases, that will also ease.

    And this is where your entire idea falls apart… The manufacturers have openly stated that they have zero interest in expanding production. They’re trying to avoid a supply surplus after the boom ends, and they know that expanding production now means crashed prices later. Why expand production, when you can simply not spend that money and charge higher prices anyways?

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  • Infernal_pizza@lemmy.dbzer0.com ⁨3⁩ ⁨weeks⁩ ago

    Even if everything you say comes true I still don’t see the prices coming back down. They never did after covid

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    • tal@lemmy.today ⁨3⁩ ⁨weeks⁩ ago

      Covid produced inflation, where the buying power of the currency dropped. This is a specific product that’s seeing a shortage — you can list plenty of points in the past where a good was in short supply and prices rose and then fell.

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      • FooBarrington@lemmy.world ⁨2⁩ ⁨weeks⁩ ago

        Instead, it’ll just see wages increase more quickly than prices for a period afterwards to restore buying power.

        Good one!

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• SuspciousCarrot78@lemmy.world ⁨3⁩ ⁨weeks⁩ ago

  You mean capitalism I think.

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• W98BSoD@lemmy.dbzer0.com ⁨2⁩ ⁨weeks⁩ ago

  What did AL do this time‽

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