I wonder if anybody has told Micron about what happens when customers sign a contract but then declare bankruptcy shortly after.
this post was submitted on 25 Jun 2026
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Software developers: more Electron and bloated frameworks are what the people want! Running 10 independent browser instances for simple chat apps is a great idea!
Isn't that called price fixing, and is generally illegal?
Only if regulatory bodies do something about it.
Wouldn’t this just be selling security?
You would enter the SCA if you want to secure your supply chain against the risk of inflated pricing. The risk would now be overspending if the market drops. Comparing the two risk profiles, an organization might decide that they have more stomach for overpaying a set amount over 5 years. As opposed, of course, to the risk of paying an arbitrarily expensive amount indefinitely as the market remains volatile.
So now, while planning out the next 5 years of business objectives, you can plan against a much more solid best/worst case scenario. That minimized uncertainty, which lets the business keep moving even if at a more expense pace.
its price fixing if the agreement is among 'competitors' - this is price fixing for a customer(s)
Yes, but it's AI, and Peter Thiel have bought all the politicians he could, so they will let them get away to "gain an advantage against China in AI".
If there’s some collusion, sure, but you’d have to find a government body with the will and teeth to prosecute.
Nothing really against charging whatever you feel like outside of things like certain supplies during disasters. It’s shitty
"Locks in"...if all of a sudden there was no demand you can be assured they would "lock out". Micron likes to put the boot to the throat when they have an advantage. Not someone I'd do business with.
Yeah, everyone was paying to back out of their contracts as soon as the prices went through the roof. The customers will do the same when they come back down if they are stuck in these contracts.
I believe that most of the customers signing these agreements are also the ones responsible for the memory shortage in the first place, and will go bankrupt when the AI bubble bursts, so the contracts will be voided in bankruptcy court.
Assuming these customers are the reason for the price hikes, their backing out is the demand loss needed to bring prices back down.
Well, I know who's gonna take a beating when the bubble pops and the market falls out from under them. What a stupid decision.
"Hey guys, this AI thing is gonna be like this forever. We'll never lack for insane demand ever again."
I think the logic for the customers is that either: A) It will work out exactly as predicted and we can afford whatever the hell we want, so it's worth it to have secured supply
B) Declare bankruptcy, the purchasing obligations no longer matter.
the barrier to entry for ddr can't be so high that someone can't buy a fab machine and undercut them can it?
It can.
It's not just the price. If you get excavators to your new chip factory plot today to start building foundations it'll take several years until you get first chips out of the line after everything is calibrated and ready to go. By then you've thrown few hundred millions on the building, machines and all the physical stuff. Hired and trained workers, managed supply chains and built a system which is pretty expensive to keep running.
So, you're betting quite a lot of money and time against that the market stays like it is for the next 10 years (give or take) to just break even. If the bubble bursts in 5 years you have incomplete factory without potential market and a metric shitload of debt on your company. And that's the same odd you're betting against when trying to raise funding. Venture capital understands this risk too pretty well and that's why everyone and their dogs aren't building chip factories right now.
Saw a great documentary on the company that makes all the memory fab devices. They aren't quite as bad a processors, There is only one company left that makes the house sized machines, but they're largely self contained. Still need a clean room, but you probably don't need as huge of a factory.
Hopefully Chinese firms recognize the gap in the market and increase their capacity.
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Fun fact: this place lays off employees damn near yearly, in big waves lol
gross margin for Micron
Gross indeed. Fucking greedy scumbags
Padme: “…and then they’ll drop, right?”
Remember they are traitors to actual customers when the bubble burtsts.
They should fail, totally, and vanish from the world.
Traitors would mean they were ever on your side. Welcome to capitalism, bud. They've always been on the side of maximum profit, like all other corporations.
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Five years is too long for the buyers. The AI bubble will burst before then and then the market price will drop as the inflated demand disappears, especially if this continues long enough for more production capacity to come online.
They might not have had much of a choice in making the deal, though. Micron has been extracting the absolute maximum they can out of this situation. Make a deal or get nothing. Their clients will remember, though, and flag them as an unreliable supplier. Once this ends—and these always end—they’ll likely have a lower market share and end up having to cut prices.
Micron is optimistic in saying the demand won’t start easing until 2028. A lot of the rest of the technology manufacturing industry is about to grind to a crawl if not a halt because it’s nearly impossible to get components. Some companies are already delaying product launches and I think a lot more are about to this summer as they realize what’s happening. If non-AI businesses start to slow, the whole economy starts to slow, the AI demand will falter and that’s when the bubble bursts. I’m thinking maybe by the end of this year, more likely next year.
When the bubble bursts I’m guessing at least a couple of the companies Micron signed SCAs with will fold and Micron won’t get anything.
When the bubble bursts I’m guessing at least a couple of the companies Micron signed SCAs with will fold and Micron won’t get anything.
This is the key. The plan for a lot of these companies is that only two outcomes exist, unimaginable success where being gouged hardly matters or just utter failure and the obligations go away in bankruptcy.
Alternatively, they just break the SCA and maybe pay some penalty less than their obligation otherwise would have been. I have seen companies sign agreements knowing up front they will break the agreements, but the contract penalties still make business sense.
I'm still waiting to see what happens when OpenAI decides to back out of some of their purchasing obligations. It's bound to happen, even if OpenAI does great. If folks think the tech sector is a bit wobbly the past few days, it pales in comparison to what such an announcement would do to the industry.
Interesting analysis. I was thinking the same, their customers might not make it.
About this point:
They might not have had much of a choice in making the deal, though. Micron has been extracting the absolute maximum they can out of this situation. Make a deal or get nothing. Their clients will remember, though, and flag them as an unreliable supplier.
Are the other two any better? If not Micron might get away with it. It doesn't strike me as a very competitive market.
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