> You don't actually "lose" capacity, you just move to higher-valued special niches within the overall industry

That's not what people mean by "lose" capacity.

Suppose DRAM companies expand capacity because prices are high, then demand levels off, the price crashes, and they all go out of business except for the one in China which gets a government bailout. That's fine, right? We're not interested in making DRAM, that's a fungible commodity, we want to make iPhones or something. (They make those too anymore, but never mind that.)

What happens now if China restricts what you can buy to give an advantage to their own companies who are trying to displace you in the higher-valued special niches? Or just raises the price for you and not them? What if there's a trade war? Or a conventional war?

When you still have a domestic industry, you go to them and have a source for the commodity. If only one country becomes the sole global supplier and that country isn't even particularly friendly, that's bad.

The domestic industry is still there, only instead of mass-market DRAM it has started making higher-valued varieties of the same stuff. If there's a trade war, they can easily reconvert to making the mass-market stuff, just at much higher cost. You can't expect more than that, since they never really were as big or as low-cost as the lowest cost suppliers can be in normal times. That's not "losing" capacity, it's just acknowledging that you can't create capacity out of thin air.

No, the domestic industry stagnates (at best) or disappears (at worst).

You can't just spin up a 2nm wafer fab when the latest you've been running is a 300nm process.

Compare: US shipbuilding industry to China or SK.

We don't want to spin up wafer fabs because, historically, they had a tendency to turn into Superfund sites. That's why the more modern approach is to build the fab in the middle of a frickin' desert.

Historically, but likely not anymore. You wouldn't be allowed to casually poison the ground in a Western factory anymore and we have the technology to keep the environment mostly clean. I don't even see it being very expensive compared to other fab costs. Have a sealed floor and proper waste / exhaust processing, don't spill in the first place. Things must be extremely well controlled anyway.

> If there's a trade war, they can easily reconvert to making the mass-market stuff, just at much higher cost.

"easily" is doing a lot of work in that sentence. Depending on the good and what they switch to making, this may neither be easy nor quick.

> If there's a trade war, they can easily reconvert to making the mass-market stuff

Factories, tooling, supply chains, and engineering knowledge aren't fungible in the way they would need to be for your statement to be true.

Different types of DRAM can literally be made from the same already-etched wafer. The DRAM bits themselves don't change at all. What's different between DDR4, DDR5, and HBM is the IO interface to the chip. Changing this does not require significant retooling or relearning.

Does that mean CXMT is one inch away from also eating into the DDR5 market?

They will eventually eat everything while they laugh at us. Why would you build a rail network if it isn't profitable? Why build anything if it isn't profitable? Why would you even house people if the profit isn't guaranteed to be as big as other sectors?

Everyone wanted denarius then escudos then guilders then pounds then dollars and soon yuan. They make stuff over there, you can buy it with yuan.

I think India might come after that but Africa is sure to follow. Give it a few hundred years.

They're still at somewhat of a process disadvantage, but they have demonstrated an ability to produce DDR4 on older processes than it's typically been produced on. So it stands to reason that their process disadvantage will not stop them from producing DDR5 at scale. Their DDR5 will just use a little more silicon, and squeeze the jigglyness from a few more electrons, but in this market, who cares if RAM cost 15% more to make and was 15% less efficient to run, if it's available to purchase at all.

> The DRAM bits themselves don't change at all. What's different between DDR4, DDR5, and HBM is the IO interface

That's not completely accurate - since the bw between these are different, the routing and therefore propagation delays for DDR4 won't allow it to magically be used as DDR5 or HBM.

If you design for the most strict timings, then sure.

> Different types of DRAM can literally be made from the same already-etched wafer.

The assumption here is that you would stop making DDR5 but continue to make DDR4 so that you could start making DDR5 again without too much trouble. But the older chips have even lower margins than the newer ones. Most of the fabs and equipment for making DDR4 were created when it was current and then they stay in operation as long as there is still enough demand for it.

If you don't make DDR5 and DDR6, what happens to your DDR4 fabs when DDR4 is where DDR2 is now? They close because nobody wants it anymore. And then you're not trying to get to DDR6 from DDR4, you're trying to get to DDR6 from an empty desert.

Higher valued varieties, or just higher priced varieties, that no one wants to buy?

If the domestic industry had the capability of competing with China on mass-market goods at a profit but just chooses not to in order to pursue a higher-profitability niche, why not simply grow and do both at the same time, instead of yielding the mass market to China?

In my mind, if it can't do that, then it can't make the volume that China does at the cost that China does, which means it really isn't as capable as Chinese industry.

Perhaps at one time it could have, but those muscles have atrophied.

Because by pursuing a more profitable niche, you can grow quicker and make more profit. If you really want to do both, you enter the mass market from above, with only slightly higher quality products than what the market leader offers. And you do that after your position in the more profitable niches has long been secured. It's silly to do it any other way.

> which means it really isn't as capable as Chinese industry.

But this was always true. There was never really a time when Western industry was producing as much and as cheaply as China is today - that's the whole point. It makes more sense to diversify away from that, because non-trivial real-world markets will always reward increased variety.

The way I see it, China has leverage once you arreive to that dependency situation. That leverages goes away the moment they restrict exports and every country scrambles to create local production once again.

We are seeing that with some rare earths, even tho china is back into exporting them (except to japan, I think?) everyone is looking for alternatives already. They may have killed their industry 10 years down the line for playing with the export lever a bit too much.

Just like how markets punish the ram cartel creating a chance for cxmt and ymtc to enter. It would create a chance for western companies to do the same if china messes with the markets they have "cornered".

> The way I see it, China has leverage once you arreive to that dependency situation. That leverages goes away the moment they restrict exports and every country scrambles to create local production once again.

The first problem is that it doesn't go away instantaneously, so even if you could recover in ten years, you still get screwed immediately.

The second problem is that it's leverage. They can threaten to do it if they don't get what they want, and if you then do what they want (which often gives them even more leverage) they don't have to do it. But then they keep their leverage and you have to keep doing what they want.