{"video_id":"fp_P3Fb5eVvM4","title":"TQ: Why RAM Prices CHANGE So Much","channel":"Techquickie","show":"Techquickie","published_at":"2020-03-18T17:11:30.013Z","duration_s":293,"segments":[{"start_s":0.0,"end_s":3.44,"text":"If you've ever suddenly needed to buy a computer memory or an SSD,","speaker":null,"is_sponsor":0},{"start_s":3.44,"end_s":6.88,"text":"there's a good chance you've experienced either sticker shock","speaker":null,"is_sponsor":0},{"start_s":6.88,"end_s":10.56,"text":"or a pleasant surprise when you looked up how much it cost.","speaker":null,"is_sponsor":0},{"start_s":10.56,"end_s":15.44,"text":"Indeed, both RAM and the NAND flash that holds the data inside SSDs","speaker":null,"is_sponsor":0},{"start_s":15.44,"end_s":19.44,"text":"are notorious for fluctuating in price more than other components.","speaker":null,"is_sponsor":0},{"start_s":20.24,"end_s":25.28,"text":"But why? To answer, we spoke with our friends at G-Skill and we'd like to thank them for","speaker":null,"is_sponsor":0},{"start_s":25.28,"end_s":32.8,"text":"contributing their insight. As it turns out, the main reason is that both RAM and NAND flash are commodity goods.","speaker":null,"is_sponsor":0},{"start_s":33.44,"end_s":39.6,"text":"And when we say commodity, we mean a good that can be used in many different types of markets.","speaker":null,"is_sponsor":0},{"start_s":39.6,"end_s":47.28,"text":"Think about corn, for example. You can eat it, sure, but it can also be used for everything from animal feed to biofuel,","speaker":null,"is_sponsor":0},{"start_s":47.28,"end_s":52.56,"text":"so large amounts of it are regularly sold to many different types of businesses.","speaker":null,"is_sponsor":0},{"start_s":53.12,"end_s":56.32,"text":"The DRAM and NAND markets work in much the same way.","speaker":null,"is_sponsor":0},{"start_s":56.72,"end_s":62.56,"text":"Nearly all modern electronic devices, everything from TVs to smartwatches to","speaker":null,"is_sponsor":0},{"start_s":62.56,"end_s":69.84,"text":"heck, even internet-connected microwaves, need both RAM and flash storage, not just computers.","speaker":null,"is_sponsor":0},{"start_s":69.84,"end_s":74.4,"text":"By comparison, something like an x86 CPU from Intel or AMD","speaker":null,"is_sponsor":0},{"start_s":74.4,"end_s":77.84,"text":"is really only being sold to two kinds of markets,","speaker":null,"is_sponsor":0},{"start_s":77.84,"end_s":83.12,"text":"system integrators like Dell or HP and retailers like New Egg and Micro Center.","speaker":null,"is_sponsor":0},{"start_s":83.12,"end_s":88.88,"text":"You also have the fact that DRAM and NAND can be shipped off more or less unchanged","speaker":null,"is_sponsor":0},{"start_s":88.88,"end_s":93.92,"text":"to these different customers. For example, the RAM that's inside your computer","speaker":null,"is_sponsor":0},{"start_s":93.92,"end_s":97.52,"text":"is not all that dissimilar from the RAM inside your phone.","speaker":null,"is_sponsor":0},{"start_s":97.52,"end_s":104.64,"text":"So if a RAM manufacturer is trying to increase supply to serve a bunch of different use cases,","speaker":null,"is_sponsor":0},{"start_s":104.64,"end_s":111.12,"text":"all they really have to do is shrink the process node so they can fit more RAM chips on one wafer.","speaker":null,"is_sponsor":0},{"start_s":111.12,"end_s":115.52,"text":"Then they cut it up like a square-cut pizza and send however many chips to buyers","speaker":null,"is_sponsor":0},{"start_s":115.52,"end_s":121.6,"text":"serving each of these different segments. Contrast that with something like manufacturing displays,","speaker":null,"is_sponsor":0},{"start_s":121.6,"end_s":127.28,"text":"where different resolutions and panel types mean that serving many different markets","speaker":null,"is_sponsor":0},{"start_s":127.28,"end_s":131.52,"text":"is much more challenging for any single consolidated manufacturer.","speaker":null,"is_sponsor":0},{"start_s":131.52,"end_s":137.92,"text":"So this ends up meaning that more external forces are exerting influence on how much DRAM","speaker":null,"is_sponsor":0},{"start_s":137.92,"end_s":143.28,"text":"and NAND will cost you, and it also means that manufacturers have a much harder time","speaker":null,"is_sponsor":0},{"start_s":143.28,"end_s":146.56,"text":"estimating how much supply they need to keep on hand.","speaker":null,"is_sponsor":0},{"start_s":146.56,"end_s":151.12,"text":"That means that both supply gluts and shortages are more likely.","speaker":null,"is_sponsor":0},{"start_s":151.12,"end_s":154.8,"text":"Shortages can and have been caused by many different things.","speaker":null,"is_sponsor":0},{"start_s":154.8,"end_s":160.32,"text":"For example, there can be unforeseen high demand when a hot new phone comes out that everyone wants,","speaker":null,"is_sponsor":0},{"start_s":160.32,"end_s":165.6,"text":"or even a service that causes a spike in demand on the server side of things.","speaker":null,"is_sponsor":0},{"start_s":165.6,"end_s":169.12,"text":"I mean, think how much more memory Google might suddenly require","speaker":null,"is_sponsor":0},{"start_s":169.12,"end_s":173.04,"text":"if their Stadia game streaming service were to take off. Good luck with that.","speaker":null,"is_sponsor":0},{"start_s":173.04,"end_s":178.16,"text":"Other times, supply can be strained by production problems such as power outages that disable","speaker":null,"is_sponsor":0},{"start_s":178.16,"end_s":182.0,"text":"the systems used to maintain their dust-free environments on the production line,","speaker":null,"is_sponsor":0},{"start_s":182.0,"end_s":186.96,"text":"meaning that manufacturers have to scrap whatever's on the line and start from scratch.","speaker":null,"is_sponsor":0},{"start_s":186.96,"end_s":192.0,"text":"Now this might only set things back a week or two and have a minimal impact on prices,","speaker":null,"is_sponsor":0},{"start_s":192.0,"end_s":196.72,"text":"but other times, natural disasters like earthquakes and fires have shut down","speaker":null,"is_sponsor":0},{"start_s":196.72,"end_s":201.12,"text":"fabs for months at a time, resulting in significant shortages in supply,","speaker":null,"is_sponsor":0},{"start_s":201.12,"end_s":204.88,"text":"something that notably happened to SK Hynex back in 2013.","speaker":null,"is_sponsor":0},{"start_s":204.88,"end_s":209.76,"text":"There's also the possibility of politics muddying things up as they so often do.","speaker":null,"is_sponsor":0},{"start_s":209.76,"end_s":214.0,"text":"For example, there was a trade dispute between Japan and Korea in 2019.","speaker":null,"is_sponsor":0},{"start_s":214.56,"end_s":219.12,"text":"Japan supplies lots of raw materials used in the manufacture of DRAM and NAND,","speaker":null,"is_sponsor":0},{"start_s":219.12,"end_s":224.16,"text":"meaning that the fabs in Korea couldn't get the ingredients they needed for a short while.","speaker":null,"is_sponsor":0},{"start_s":224.72,"end_s":232.16,"text":"Now that situation was fortunately resolved quickly, but any kind of more protracted conflict could have driven prices up in a big way.","speaker":null,"is_sponsor":0},{"start_s":232.16,"end_s":236.72,"text":"Of course, sometimes mishaps end up working in the consumer's favor instead.","speaker":null,"is_sponsor":0},{"start_s":236.72,"end_s":242.0,"text":"In the mid-2000s, there was a huge surge of people buying mobile devices like phones,","speaker":null,"is_sponsor":0},{"start_s":242.0,"end_s":247.36,"text":"and the RAM manufacturers assumed that this trend would just keep going the way that it was.","speaker":null,"is_sponsor":0},{"start_s":247.36,"end_s":252.56,"text":"So they started churning out lots more RAM, but instead, the market got saturated.","speaker":null,"is_sponsor":0},{"start_s":252.56,"end_s":256.72,"text":"Suddenly, everybody already had a phone. Or two.","speaker":null,"is_sponsor":0},{"start_s":256.72,"end_s":260.16,"text":"And sales slowed down, so suddenly there was a lot of excess supply,","speaker":null,"is_sponsor":0},{"start_s":260.16,"end_s":263.92,"text":"meaning that folks who bought RAM during this time ended up getting a bargain.","speaker":null,"is_sponsor":0},{"start_s":263.92,"end_s":268.48,"text":"There have even been times that memory prices have been pushed below the manufacturing cost","speaker":null,"is_sponsor":0},{"start_s":268.48,"end_s":273.76,"text":"for the DRAM chips, because it's worse for the manufacturers to shut down the fabs","speaker":null,"is_sponsor":0},{"start_s":273.76,"end_s":278.64,"text":"than to keep pumping out chips at a loss like during the Great Pringles Incident of 1994,","speaker":null,"is_sponsor":0},{"start_s":279.36,"end_s":284.56,"text":"which actually wasn't a real thing. It was never a Pringles incident that I know of.","speaker":null,"is_sponsor":0}],"full_text":"If you've ever suddenly needed to buy a computer memory or an SSD, there's a good chance you've experienced either sticker shock or a pleasant surprise when you looked up how much it cost. Indeed, both RAM and the NAND flash that holds the data inside SSDs are notorious for fluctuating in price more than other components. But why? To answer, we spoke with our friends at G-Skill and we'd like to thank them for contributing their insight. As it turns out, the main reason is that both RAM and NAND flash are commodity goods. And when we say commodity, we mean a good that can be used in many different types of markets. Think about corn, for example. You can eat it, sure, but it can also be used for everything from animal feed to biofuel, so large amounts of it are regularly sold to many different types of businesses. The DRAM and NAND markets work in much the same way. Nearly all modern electronic devices, everything from TVs to smartwatches to heck, even internet-connected microwaves, need both RAM and flash storage, not just computers. By comparison, something like an x86 CPU from Intel or AMD is really only being sold to two kinds of markets, system integrators like Dell or HP and retailers like New Egg and Micro Center. You also have the fact that DRAM and NAND can be shipped off more or less unchanged to these different customers. For example, the RAM that's inside your computer is not all that dissimilar from the RAM inside your phone. So if a RAM manufacturer is trying to increase supply to serve a bunch of different use cases, all they really have to do is shrink the process node so they can fit more RAM chips on one wafer. Then they cut it up like a square-cut pizza and send however many chips to buyers serving each of these different segments. Contrast that with something like manufacturing displays, where different resolutions and panel types mean that serving many different markets is much more challenging for any single consolidated manufacturer. So this ends up meaning that more external forces are exerting influence on how much DRAM and NAND will cost you, and it also means that manufacturers have a much harder time estimating how much supply they need to keep on hand. That means that both supply gluts and shortages are more likely. Shortages can and have been caused by many different things. For example, there can be unforeseen high demand when a hot new phone comes out that everyone wants, or even a service that causes a spike in demand on the server side of things. I mean, think how much more memory Google might suddenly require if their Stadia game streaming service were to take off. Good luck with that. Other times, supply can be strained by production problems such as power outages that disable the systems used to maintain their dust-free environments on the production line, meaning that manufacturers have to scrap whatever's on the line and start from scratch. Now this might only set things back a week or two and have a minimal impact on prices, but other times, natural disasters like earthquakes and fires have shut down fabs for months at a time, resulting in significant shortages in supply, something that notably happened to SK Hynex back in 2013. There's also the possibility of politics muddying things up as they so often do. For example, there was a trade dispute between Japan and Korea in 2019. Japan supplies lots of raw materials used in the manufacture of DRAM and NAND, meaning that the fabs in Korea couldn't get the ingredients they needed for a short while. Now that situation was fortunately resolved quickly, but any kind of more protracted conflict could have driven prices up in a big way. Of course, sometimes mishaps end up working in the consumer's favor instead. In the mid-2000s, there was a huge surge of people buying mobile devices like phones, and the RAM manufacturers assumed that this trend would just keep going the way that it was. So they started churning out lots more RAM, but instead, the market got saturated. Suddenly, everybody already had a phone. Or two. And sales slowed down, so suddenly there was a lot of excess supply, meaning that folks who bought RAM during this time ended up getting a bargain. There have even been times that memory prices have been pushed below the manufacturing cost for the DRAM chips, because it's worse for the manufacturers to shut down the fabs than to keep pumping out chips at a loss like during the Great Pringles Incident of 1994, which actually wasn't a real thing. It was never a Pringles incident that I know of."}