> are now not scaling up production according to demand.
Would you though? If/when the AI bubble pops and the buildout of data centres either stops or plateaus then they'd suddenly be sitting in a vastly oversaturated market and struggle to make it to the end of the year.
If there was healthy competition, yes, because it’s not as if this hasn’t been going on for years at this point.
All the healthy competition is operational now.
New fabs will be operational in a while, which is too big of a risk to take in these times.
It takes a while to build those fabs.
> struggle to make it to the end of the year.
Considering the profits they've made this year, on average they still wouldn't do too bad. SK Hynix employees got almost $500k for example, I can live on that for a few years. Companies are often also legally required to compete with each other.
But they are scaling up the production, they just conveniently did it a bit late. I also fear if/when the bubble pops, they'll quickly reduce the production to ensure prices stay high. I fear Nvidia could do the same. I think it'll be hard for all of them to go back to a world where they're paid way less per component, so instead of accepting that, they can reduce the supply and keep the prices high. Only antitrust regulators could intervene to stop that.
Many people expect prices to go down after the bubble pops, but it may not happen as much as we would want to.
Remember when the dot com bubble burst and after that the Internet became a billion times more important than before? Wikipedia didn't even exist when the dot com bubble collapsed!
All that bubble popping will do is wipe out some investor's money. Everything else will stay and become more and more important.
But of course, it is more profitable to sell one item for $1000 than it is to sell ten items for $100 each. And even if a competitor shows up, you can just price dump with all the extra money you already made until that competitor goes away.
This is what I say about any financial collapse/bubble pop/credit crunch. Resources don't blow up, people don't drop dead in the streets. A few rich folk who thought they were getting paid, aren't. Everything that happens after is second-order effects of them getting huffy about it. They don't have to cut wages and fire people and disrupt the supply chain; they could sacrifice their own largesse to keep things stable. (And the job of government in those circumstances is to force them to.)