This feels like a classic business blunder. Focus hard on a single business segment, leaving an opening in the market for your competitors. Not because it wasn't profitable, but because it wasn't profitable enough for you, right now. Only downside is that now you've created an opening for a new player in the market.
This feels like a short coming of western business/stock market thinking. Focusing on profit within the next few quarters, and not caring about the longer term consequences. For all it's flaws and shady business practises at least China can think beyond a single fiscal year.
tjwebbnorfolk•about 5 hours ago
Ok but this is how the market is supposed to work. If the incumbents aren't doing what their customers want, then competitors can rise and fill the gap and compete.
This isn't a shortcoming, it's a competitive market working as intended.
delecti•about 4 hours ago
The market doing what it's supposed to do does not negate that the market segment has only been left open because of overly myopic businesses.
qup•about 2 hours ago
Why would we think businesses will always make the right move?
They'll blunder. They'll do it even harder in the absence of competition.
estimator7292•about 2 hours ago
That's what modern capitalism is and it's bad for everyone
PearlRiver•about 2 hours ago
Everyone gets mad when Chinese do capitalism...
joe_mamba•about 2 hours ago
NO you see, we have to hate Chinese companies because they are unfair competitors since they get state funding from the Chinese government, unlike Intel, Micron, TSMC, ASML, Samsung who don't get state funding from the US, EU, Taiwan, ROK ... oh wait.
Scratch that, we have to hate Chinese companies because they do business with the Chinese military, unlike Intel, Nvidia, Samsung who don't do business with the US and ROK military ... oh wait.
bigyabai•about 2 hours ago
"Why is nobody berating China?" is my favorite oft-repeated refrain on HN.
sophrosyne42•about 2 hours ago
There is really nothing about the stock market that means only thinking about the mext few quarters. See all the losses on the profit and loss statements of AI tech giants, or, say, game console companies? Why are their stocks still valued so highly during these periods? The answer: investors are thinking long term.
It is really impossible to have quality long term thinking without capitalization accounting and similar instruments that come out of the "wester" system of business that chinese free enterprise gladly and speedily copied when it was made free.
xadhominemx•about 4 hours ago
CXMT sells the vast majority of their bits at the prevailing market rate, just like everyone else. They are adding capacity as quickly as they can, with a 5-10 year planning horizon, just like everyone else. It’s really not that deep!
orphea•about 4 hours ago
> They are adding capacity as quickly as they can [...], just like everyone else
Are you sure? In the past they explicitly said they are not going to increase production.
PRC asked them to curtail DDR4 production so they didn't bottom out the market a year or two ago, and to focus on latest gen development, like HBM. They were the world leader in cost efficient DDR4 production at the time.
xadhominemx•about 4 hours ago
Yes of course their messaging to customers and the investment community is that they will be rational and measured in their investments. In reality, they are adding capacity as quickly as possible as margins are too high. However, capacity addition leading edge semiconductor manufacturing has a multi-year lead time.
zozbot234•about 2 hours ago
It's not really a blunder though. Given that total capacity is tightly constrained, Samsung and SK Hynix are happy to focus on what they do at their best and with the highest margins. Why shouldn't they supply the HBM market?
someperson•about 5 hours ago
As a outside observer, NAND and DRAM prices have skyrocket ed with the AI infrastructure boom just as the China-based fabs are coming online.
It is wise for these Chinese fabs to eventually use a very aggressive dumping strategy to price well below cost push out other players forever, especially in DRAM.
But right now it seems they can max out their supply capacity without selling below cost.
Appears to me like China's endless state led (often unproductive) investment in semiconductor manufacturing subsidies (for decades) is about to pay off with some industry dominance soon.
Like the electric vehicle sector.
dygd•about 2 hours ago
> It is wise for these Chinese fabs to eventually use a very aggressive dumping strategy to price well below cost push out other players forever, especially in DRAM.
Crucial's departure from the consumer market left such a gaping hole, that CXMT doesn't even need to push other players out to gain a footing.
maxglute•about 2 hours ago
How's it dumping below cost when hey can simply sell for 100% margins instead of western makers selling for 400%.
shimman•about 2 hours ago
Because only western companies are allowed to make massive profits at the expense of entire nations, it's not greed when they do it apparently.
PowerElectronix•about 3 hours ago
I personally fail to see the downside of any manufacturer selling forever at a loss, except for the manufacturer itself.
xyzzy123•about 3 hours ago
You become dependent on the supplier.
The downside in general is that other countries lose production capacity in steel, heavy industry, semiconductors, machine tools etc - industries that took decades to build and can't be easily replaced.
Also they gradually lose the ability to meaningfully innovate in those sectors because there's no grounding against production reality anymore.
This has geopolitical consequences further down the line.
zozbot234•about 1 hour ago
> The downside in general is that other countries lose production capacity in steel, heavy industry, semiconductors, machine tools etc - industries that took decades to build and can't be easily replaced.
That's not really what happens though. You don't actually "lose" capacity, you just move to higher-valued special niches within the overall industry because (1) you can afford to, while low-cost competitors can't and (2) you can no longer expect to be the lowest-cost supplier for the bulk of the market. That's a win-win development and something to be encouraged.
riku_iki•about 3 hours ago
> steel, heavy industry, semiconductors, machine tools
the question is if single country can carry all these industries at loss for prolonged period of time.
Another approach is to rely on international supply chain and speed of innovation, we can't produce steel domestically profitably today, fine, we may buy it from diversified international supplier network, and rebuild it fast tomorrow if needed using new tech, and focus on many other high margin verticals, instead of putting many billions of resources into infra which could be obsolete tomorrow.
numpad0•about 3 hours ago
the currency eventually collapses
extraduder_ire•about 2 hours ago
I don't know if it's still a thing, but China was getting a lot of heat about a decade ago for purposefully devaluing their currency to make their exports more attractive.
They kind of had to do this, because their large amount of exports were pushing the value of it up compared to others.
nutjob2•about 4 hours ago
It's funny that you call this an "very aggressive dumping strategy" while AI vendors are doing the same but with even greater losses and on a much larger scale.
It's all simply a fight for market share.
The original sin is the existing DRAM vendors selling their entire (spare) capacity to the likes of OpenAI.
xadhominemx•about 4 hours ago
No one sold their capacity to OpenAI. The vast majority of DRAM is transacted in what is essentially a quarterly auction.
nutjob2•about 2 hours ago
"RAM is going to AI: OpenAI has secured up to 40% of the market."
You're maybe talking about the spot market, but companies are free to make any sort of supply contract.
PearlRiver•about 2 hours ago
Chinese investment has not been unproductive. It gave them independence so that the US could not cut them of- see Cuba.
7777777phil•about 3 hours ago
DDR4 going from $1.35 to $11.50 in a year shows this market was already distorted before CXMT showed up.
Legacy DRAM is still over half of Samsung and SK hynix's production capacity. That's where the volume pain actually lands while they're betting everything on HBM4.
Magnets•about 3 hours ago
This is just marketing. Why would you sell at 50% of market rate? Chinese production of NAND and DRAM is not significant, it's single digit %
deepsquirrelnet•about 1 hour ago
Does the last part of your comment explain it? They need revenue to expand capacity and the market has opened up a window to become a bigger supplier while still being profitable.
amluto•about 3 hours ago
It might be very effective marketing. The big non-Chinese OEMs trust and use Korean and Japanese DRAM, and they might have been unwilling to put DRAM from CXMT into their products. (CXMT is newish, does not have access to ASML gear, which ASML would like you to believe makes it harder to make high-quality DRAM, DRAM is historically not a very large fraction of the cost of most non-huge-memory machines, and a bad DIMM is an expensive mistake for a company like Dell or HPE that is on the hook for repairs.)
But now CXMT seems to have gotten at least Dell, HP (I wonder if there’s article meant HPE), Acer and Asus to buy and attempt to qualify samples. If CXMT lands some serious purchasing agreements while still selling well above cost, that’s a win for them.
fulafel•about 2 hours ago
Has DDR5 caught up to DDR4 latency yet? I remember it was worse at least in the beginning. There's more bandwidth per channel but a hw design can always add more channels for the desired BW. Not so for latency.
kvemkon•about 2 hours ago
> add more channels
and unfortunately increase latency even more with registered DIMMs. Comparing bandwidth increase (50 GB/s) to the stagnated latency (~80..120 ns total, less than ~0.1 GB/s) over last decades, I'm wondering, whether one still can call today's RAM random memory (though sure it can be accessed randomly). Similar to hard disk drives. Up to 300 MB/s sequentially but only up to less than 1 MB/s 4KB random (read).
Discussion (58 Comments)
This feels like a short coming of western business/stock market thinking. Focusing on profit within the next few quarters, and not caring about the longer term consequences. For all it's flaws and shady business practises at least China can think beyond a single fiscal year.
This isn't a shortcoming, it's a competitive market working as intended.
They'll blunder. They'll do it even harder in the absence of competition.
Scratch that, we have to hate Chinese companies because they do business with the Chinese military, unlike Intel, Nvidia, Samsung who don't do business with the US and ROK military ... oh wait.
It is really impossible to have quality long term thinking without capitalization accounting and similar instruments that come out of the "wester" system of business that chinese free enterprise gladly and speedily copied when it was made free.
https://www.tomshardware.com/pc-components/dram/memory-maker...
It is wise for these Chinese fabs to eventually use a very aggressive dumping strategy to price well below cost push out other players forever, especially in DRAM.
But right now it seems they can max out their supply capacity without selling below cost.
Appears to me like China's endless state led (often unproductive) investment in semiconductor manufacturing subsidies (for decades) is about to pay off with some industry dominance soon.
Like the electric vehicle sector.
Crucial's departure from the consumer market left such a gaping hole, that CXMT doesn't even need to push other players out to gain a footing.
The downside in general is that other countries lose production capacity in steel, heavy industry, semiconductors, machine tools etc - industries that took decades to build and can't be easily replaced.
Also they gradually lose the ability to meaningfully innovate in those sectors because there's no grounding against production reality anymore.
This has geopolitical consequences further down the line.
That's not really what happens though. You don't actually "lose" capacity, you just move to higher-valued special niches within the overall industry because (1) you can afford to, while low-cost competitors can't and (2) you can no longer expect to be the lowest-cost supplier for the bulk of the market. That's a win-win development and something to be encouraged.
the question is if single country can carry all these industries at loss for prolonged period of time.
Another approach is to rely on international supply chain and speed of innovation, we can't produce steel domestically profitably today, fine, we may buy it from diversified international supplier network, and rebuild it fast tomorrow if needed using new tech, and focus on many other high margin verticals, instead of putting many billions of resources into infra which could be obsolete tomorrow.
They kind of had to do this, because their large amount of exports were pushing the value of it up compared to others.
It's all simply a fight for market share.
The original sin is the existing DRAM vendors selling their entire (spare) capacity to the likes of OpenAI.
https://globalcio.com/news/16062/
You're maybe talking about the spot market, but companies are free to make any sort of supply contract.
Legacy DRAM is still over half of Samsung and SK hynix's production capacity. That's where the volume pain actually lands while they're betting everything on HBM4.
But now CXMT seems to have gotten at least Dell, HP (I wonder if there’s article meant HPE), Acer and Asus to buy and attempt to qualify samples. If CXMT lands some serious purchasing agreements while still selling well above cost, that’s a win for them.
and unfortunately increase latency even more with registered DIMMs. Comparing bandwidth increase (50 GB/s) to the stagnated latency (~80..120 ns total, less than ~0.1 GB/s) over last decades, I'm wondering, whether one still can call today's RAM random memory (though sure it can be accessed randomly). Similar to hard disk drives. Up to 300 MB/s sequentially but only up to less than 1 MB/s 4KB random (read).
Once established, the Chinese vendors will retain most the market share if the quality is ok. The SK/JP vendors are making a big mistake.
They will compete on price if they are forced to, but they aren't forced to right now
USA got dominant, got arrogant, letting China eat their lunch.
China is indeed getting dominant. They will get arrogant one day. Meanwhile, Western Europe and the USA are still very good places to live.