DRAM Shortage
Table of Contents
The explosion of AI has lead to massive disruptions along the technology supply chain. The most recent of which is the DRAM shortage, causing a 300% price increase for consumer DRAM sticks. The crisis of this can not be understated, being one of the essential components in nearly every piece of technology. Phones, TVs, laptops, PCs, tablets. How can this even happen?
Who to blame?
There are a lot of people, companies or things to blame in the DRAM crisis. Of course the blame can be put on AI companies who are causing the massive increase in demand, trying to serve a product that has virtually no societal value. While affordable and abundant access to personal computers does have society value.
We can also blame the NVIDIAs of the world, who happily profit from this AI boom to make money hand-over-fist while leaving the average consumer out in the cold. Which they have a history of doing.
Or we could blame the memory makers, SK Hynix, Micron, Samsung Electronics, who eagerly allocate their fab capacity for AI products, knowing that this bubble likely won’t last and that this is likely to put their pre-existing long-term partners out of business due to not being able to get any memory.
But that is all boring surface-level analysis. Something that I haven’t seen discussed in any analysis on this is the role of systemic wealth inequality.
Computing & centralization
Computing is moving out of the hands of general consumers and into the hands of large multi-national companies and those who own those companies. It happened with GPUs before and now it’s coming to DRAM, and even if the supply-demand imbalance improves, I don’t see it ever returning to the way it was.
What we’ve seen since the early 2000s, with the Web2.0 is a move towards platforms, and with that a larger share of computing in the hands of companies and occurring inside datacentres.
AI is not a radical departure from this trend, it’s only an acceleration. And here is why.
Computing is a tool to facilitate tasks that require some kind of computation. These tasks can be completed either on your own machine.
For this you will pay some upfront investment cost to acquire the hardware required to perform the computational task, and you pay for the electricity.
The alternative is paying someone else to perform the computation for us, usually through some kind of subscription model. Think of ChatGPT, but also Google Drive/Photos, iCloud, and even Netflix.
Now some of the services I have mentioned are storage related, but the fundamental idea remains the same. Either we pay upfront, or we rent out someone else’s hardware.
The squeeze
The economic trend that categorizes our time, is growing wealth inequality. More than anything, this explains what is happening in our world today and what will happen tomorrow.
The basic argument is as follows:
- The rich have a lower propensity to spend, meaning that they retain a larger fraction of their income at the end of the month than ordinary working-class people.
- Since this money is just sitting around doing nothing, they invest it. You can only own so many yachts and mansions after all. They invest it into buying assets and means of production.
- This effect transfers ownership from governments and ordinary people to the rich.
- If left unchecked by increased taxation, this creates a snowball effect. As rich own more, the more they earn, the more they get to keep, and re-invest to own even more.
RAM prices
Now how does this impact RAM prices?
The increasing ownership of the economy by the rich, will push ordinary people out of owning their hardware. They simply have less spending power, and the rich can drive up the price of whatever drives their economic needs.
Whether it’s housing, or computer hardware, if it’s deemed valuable by the rich, they will gradually increase their ownership over that sector.
Right now RAM prices are increasing because of the AI bubble, but the fundamental push is not for AI, but the rich are pushing to control an ever larger share of computing. Computing has become an essential part of modern life, and thus is valuable to own.
Whether we outsource our computing to AI service companies like OpenAI, or something else, it doesn’t matter, the trend remains the same.
The trend is actually self-reinforced by the rich exerting their control over the RAM market. The increased demand from the AI giants, will soon make it impossible for ordinary people to own the hardware required to perform computing tasks, which requires them to outsource their computing needs to these same tech companies.
The future
Where is the future going?
No one can predict the future accurately, but likely personal computing will become a blip in history, a temporary period of unparalleled access and freedom.
Hardware will continue to get more and more expensive, making it nearly impossible for people to buy anything expect the bare essentials (i.e. a smartphone).
Even longer term, I wouldn’t be surprised if we stop owning hardware alltogether and instead start renting our hardware to access our subscription services.