#HPsCommentary
#Business #AI #Investment

*#DRAM price hikes are unwarranted--Party Like It's 1999*

(1/n)

What could happen? --History does not repeat itself, but it surely does rhyme.

*Case Study: The 1999 #Taiwan Earthquake and the Global Silicon Aftershocks*

The September 21, 1999 Taiwan earthquake (magnitude 7.6) did initially trigger dramatic #DRAM price spikes.

Key Data Points:

64-Mbit DRAM (memory) spot-market prices reached $21.25 in N-#American markets following...

(2/n)

the September 21, 1999 earthquake.

Prior to the earthquake (Sept. 20): Prices were around $15.50

Price jump: Approximately 37% increase in one day

Contract pricing: #Micron raised 64-Mbit #DRAM from $7.50 to >$9

The article documents immediate panic buying by OEMs concerned about supply disruptions, with Micron's VP of Investor Relations stating

"There's not a lot of volume going on there because the suppliers were woefully short, even prior to the earthquake."

@jpturcotte

*DRAM price hikes are unwarranted--Party Like It's 1999*

(3/n)

eetimes.com/dram-prices-rise-s…

However, the price, in fact, the whole market, collapsed after production capacity proved intact:

128-megabit #DRAM prices fell to $0.99 (a record low for that period)

Manufacturing cost: ~$2 per chip

Price versus cost margin: Chips selling at 50% of production cost

Industry context: "All DRAM makers reported losses after sales worldwide fell two-thirds to US$10 billion"

Manufacturers' capacity...

*#DRAM price hikes are unwarranted--Party Like It's 1999*

(4/n)

...utilization: #TSMC and #UMC operating at below 50% capacity; Chartered at 25%

Key Quote:
The article states that
👉"The capacity that resulted in 2001 came from the perception that demand would grow forever," indicating that manufacturers had built facilities during the 1999-2000 boom based on inflated demand expectations.👈

taipeitimes.com/News/biz/archi…

👉Well, couldn't that almost be an article from last week...? 👈

@jpturcotte

Chip recovery may come slowly

Miin Wu (吳敏求), chairman of Macronix International Co (旺宏電子), looks out his office window at the empty plant the nation\'s fourth-largest chipmaker built just as the semiconductor industry\'s boom turned to bust early this year.

^台北時報

#HPsCommentary

*#DRAM price hikes are unwarranted--Party Like It's 1999*

(5/n)

#DRAM price anomaly?

With a huge backlash now against #Datacenters (ex-China,) at least in the Western World, and energy supply being a strong limitational, factor, as #ElonMusk explained in his recent long #TheEconomist interview, I don't...

@jpturcotte

@mountdiscovery

(6/n)

...see how these prices can last in the medium term.

Without #SpaceX' #Datacenters in space and #AI efficiency gains failing to materialize in the short term, the AI Industry being heavily leveraged, we have all the ingredients of yet another chip price crash in place.--Not only for memory chips, but also for #GPU|s.

With virtually all industries seemingly going "all in" on #AI, and keeping in mind that, at least in #Germany, the aftermath of the 1999...

@jpturcotte @mountdiscovery

#HPsCommentary

*#DRAM price hikes are unwarranted--Party Like It's 1999*

(7/n)

... #Taiwan quake incident subsequently led to the elimination of a complete #Stockmarket segment (the #NeueMarkt,) I am afraid a global crash could be in the league of the 1929 #GreatDepression.

I haven't done an analysis, but the new core technology of the 20th century, #Electricity, could be yet another worthwhile case study...

@jpturcotte @mountdiscovery

@mountdiscovery

(8/n)

PS
The Internet at the turn of the millennium was just a new industry. Today's #AI revolution is a global, pervasive base technology. It blows away whole production processes (also in a figurative meaning) and lays off knowledge workers.

*Outlook*
When the dust settles, there will often be no-one around who knows how things work. Maybe, because (s)he was layed off, but maybe because the design wasn't human to...