New details reveal that former NVIDIA CEO Jensen Huang used circular financing to fund AI startups and absorb excess TSMC wafers and memory rather than letting GPU prices drop
It’s not really false scarcity though. It’s creating real demand to create real scarcity. It’s like if diamond miners invested in companies putting diamond tips on drills or something.
What I’ve heard is that the companies that make memory didn’t slow production, but they didn’t ramp up production either. They kept it at the same rate, and then just watched as the prices went up. At least the workers in some of those companies went on strike so they could get a share of the immense profits.
But, they weren’t colluding with the AI companies or nVidia. Those companies were pissed off that they had to pay top dollar for memory. They wanted the companies to invest in more production capacity so they could buy the memory for a reasonable price. But, there were only a couple of companies that manufacture memory, so it was easy for them to collude and screw over the hyperscalers (and incidentally ordinary consumers).
It’s not really false scarcity though. It’s creating real demand to create real scarcity. It’s like if diamond miners invested in companies putting diamond tips on drills or something.
Chip manufacture was also deliberately slowed. The whole industry was in on the con.
What I’ve heard is that the companies that make memory didn’t slow production, but they didn’t ramp up production either. They kept it at the same rate, and then just watched as the prices went up. At least the workers in some of those companies went on strike so they could get a share of the immense profits.
But, they weren’t colluding with the AI companies or nVidia. Those companies were pissed off that they had to pay top dollar for memory. They wanted the companies to invest in more production capacity so they could buy the memory for a reasonable price. But, there were only a couple of companies that manufacture memory, so it was easy for them to collude and screw over the hyperscalers (and incidentally ordinary consumers).