back to article But of course the US and China's trade war is making those godDRAM oversupply issues worse

The ongoing trade dispute between the world's largest economies is exacerbating the problems with DRAM supply to the point that memory printing might become a loss-making activity. DRAMeXchange, a division of analyst firm TrendForce that tracks memory pricing, has just revised its projections, expecting that prices will go …

  1. b0llchit Silver badge
    Facepalm

    Shoot foot, then head

    With the man-power of the east, you can not starve the dragon. It will simply find or create a new source of (food-)supply.

    The trade-war will likely accelerate the inhouse development and production of most, if not all components in China and result in a major loss for the USA. Probably taking many more international companies down with it. In other words, a total loss if/when China weans itself off of the international component market. They have the technology close by and have the man-power and political power to do so. Do not underestimate the dragon.

    1. Korev Silver badge

      Re: Shoot foot, then head

      Historians will look back in the future at marvel at how the West built up the Chinese industry to make a short term increase of profits.

      1. K

        Re: Shoot foot, then head

        Exactly 100% this - And its funny, I work with quite a few american (part of a global netsec team), most of them applaud Trump for it.

        Even with Trump saying "we can do a deal", its too late asshole, international companies no longer trust you. In the short term, the US will gain from this, but long-term, these companies will either look else where, or develop it themselves. The only loser in the long term in the US and global consumers!

        1. rcxb

          Re: Shoot foot, then head

          > international companies no longer trust you.

          International companies never trusted China, but they still crawled on their hands and knees to get access to that huge consumer market. The US has the biggest market, and cutting off your profits to spite your face just isn't a likely outcome.

          More likely is future trade deals with the US (and China) including a nuclear option... If one party imposes tariffs, even for "national security reasons," the other party gets a huge cash sum, or similar.

          1. Alan Brown Silver badge

            Re: Shoot foot, then head

            "The US has the biggest market, and cutting off your profits to spite your face just isn't a likely outcome."

            Firstly, the USA is _not_ the biggest market,, nor is it the largest economy (it's third) and it's stagnating. As a percentage of the overall world market a number of large multinational companies don't bother doing business there due to the entrenched parochialism and systemic problems encountered - or if they do, they treat it as a minor operation.

            Secondly, for all the dickwaving coming from the USA - and it IS dick waving - the chinese have an iron grip on the dangly parts that matter below - the moneybags.

            The USA is a bit like a blowfish - with a few very loud voices far louder than their economic worth - Hollywood could be hoovered up wholesale by Google using spare chance form down the back of the sofa as one example.

            China's manouvered itself into in a position where it can say this:

            "If you fight, we’ll call in your mortgages. And incidentally, that’s my pike you’re pointing at me. I paid for that shield you’re holding. And take my helmet off when you speak to me, you horrible little debtor."

            If it does so, the USA has _zero_ choice but to go home - humiliated without a shot being fired - the reason being that the _moment_ it defaults on any of its debts or is seen to go to war to avoid them, the mighty US Dollar will cease being the world's chosen trading instrument. It's been rumoured for years that the _real_ reason for Gulf War 2 was because Saddam Hussein had started trading oil in Euros and the USA couldn't allow that habit to spread.

            The last set of big wars over who owned global trade was fought between the UK and Germany, starting with rivalries in the 1860s and military buildups from the 1880s - culminating in round one in 1914-1918 and round two in 1939-1945. The answer that time was "The USA thanks you"

            The time before that was between Spain and Portugual - with the UK coming out the winner after some sideline fun with France.

            If the USA chooses to go head to head with China, who will come out on top in trade? India? Nigeria? Whatever the answer, it _won't be the USA.

        2. Alan Brown Silver badge

          Re: Shoot foot, then head

          "The only loser in the long term in the US and global consumers!"

          The US, certainly.

          Global consumers? Probably not.

          The USA's form of power projection (economic and military) has been establishing a damaging hegemony over the last few decades.

          People may decry captialism, but when done right - as it has been in a lot of places - it's pulled 3-4 BILLION people out of poverty. The problem is preventing capitalism turning into mercantilism as it has in the USA.

          Adam Smith is quoted by many, but they always miss out the parts where he says there are limits to growth and that companies must always operate in an _ethical_ manner. It's a bit like watching bible quotations being bandied about to justify the most horrific activities and crimes imaginable.

      2. vtcodger Silver badge

        Re: Shoot foot, then head

        "Historians will look back in the future at marvel at how the West built up the Chinese industry to make a short term increase of profits."

        Well, yes. But it's a bit hard to see what other choices the West had or has. There are a LOT of Chinese -- 1.3B of them give or take. They are disciplined, hard working, and they work cheap. Much like the Japanese in the 1950s (who the Chinese seem to have used as a model), the Chinese are pretty much inevitably going to become major players in whatever business they set their mind to learning. At least until their standard of living and production costs approach those of the West.

        The West could, of course avoid trading with China -- as the US did in the 1930s with Japan and is doing today with Iran. But the results back then were pretty ghastly for all concerned. And probably would/will be equally unfortunate today.

    2. Martin Gregorie

      Re: Shoot foot, then head

      A very similar scenario was played out in the 50s and 60s when the US put a total trade embargo on China when it entered the Korean War. That embargo was in place from 1950 to 1972 and had two main effects:

      • it vastly strengthened Chinese science, engineering and manufacturing capabilities
      • it fostered the Sino-Soviet split
      • More here:

        https://www.jstor.org/stable/44288827?seq=1#page_scan_tab_contents

      ..but its the first result that's important here.

      I first heard about this when I was a student in 1966 or 1967, when one of our lecturers visited China to a chorus of abuse from local politicians and journos. On his return he gave a talk about his trip to the science faculty.

      His main discovery was that the embargo had strengthened Chinese science by forcing them to be self-reliant and that, because they could no longer buy machine tools, scientific instruments and reagents from the West, they created industries to make all this stuff themselves: it was a case of doing that or doing without. I remember him saying that all the older equipment in laboratories tended to carry West German brand names but all the new kit was Chinese-made and was as good as anything in our own labs.

      I think its fair to say that this provided the industrial and scientific base that the current Chinese export industry is built on, with the Sino-Soviet split having a similar effect on their space, nuclear and aviation industries.

      If there is a message in this for Trump, its that his current tariff war is more likely to strengthen China than to weaken it. American industry is likely to find itself short of everything they've offshored production for while the US consumer pays for the increased tariffs with higher retail prices. IOW, a tariff is only beneficial to the state imposing it if the goods it covers are NOT imported from the targetted sources.

      1. Chris G Silver badge

        Re: Shoot foot, then head

        Also, this time around it is fostering a Sino-Russian meld, the two leaders have just met and signed over thirty different agreements between the two countries.

        That includes strong agreements to trade using national currencies and encouraging others to do the same.

        If I had a truck load of dollars right now, I would be following the major banks and buying gold with the dollars.

        1. Alan Brown Silver badge

          Re: Shoot foot, then head

          "I would be following the major banks and buying gold with the dollars."

          Only if you can actually touch and hold the metal.

          There's at least 3 times as much gold being traded as actually exists. When the wheel stops spinning a lot of people are going to feel quite hard done by.

      2. Charlie Clark Silver badge
        Thumb Up

        Re: Shoot foot, then head

        Presumably, if it hadn't been for Mao's own assault on the countries limbs through the GLF and the cultural revolution (what great benefits that brought to science in China), China would have made even faster progress.

        Even so, I think the bigger problem with the Big Baby's™ current approach is how it is driving current trade partners closer to China. The US can still apply a lot of pressure through the dollar hegemony, so it's obvious that everyone is now working out how to work around this.

        America didn't win the cold war because it had better spooks, but because it traded more freely. Still you can't expect Mr Short Attention Span to appreciate this.

        1. Anonymous Coward
          Anonymous Coward

          Re: Shoot foot, then head

          "America didn't win the cold war because it had better spooks, but because it traded more freely."

          You actually believe this? America has never had "free trade" into USA. On anything. Only demanded from everyone else that US products and capital are free to import.

          USA won because their currency is tied with oil and oil availability. No dollars, no oil for you.

          That's the only reason. And military power to keep it that way.

          1. Anonymous Coward
            Anonymous Coward

            Re: Shoot foot, then head

            It won't always be that way - military power or not.

            The rest of the world is realising it has a real choice rather than Hobson's choice.

          2. Charlie Clark Silver badge

            Re: Shoot foot, then head

            The US certainly traded more freely than the USSR. Yes, it wasn't afraid to apply pressure or meddle or interfere directly (there is no excuse for Chile, Guatamala, etc.), but by and large it was successful in international trade because it played by the rules. Admitttedly rules that it helped to write and which helped cement the primacy of the US dollar (Bretton Woods) but rules that supported reasonably free trade all the same.

    3. Alan Brown Silver badge

      Re: Shoot foot, then head

      "Do not underestimate the dragon."

      Until approximately 200-400 years ago, China was one of the advanced and influential world powers. What happened (apart from gunboat diplomacy) was the industrial revolution - more precisely it _DIDN'T_ happen in China to anywhere near the extent it happened in the rest of the world, mostly because the energy sources (coalfields) were inland and largely inaccessable to most of the population, but also due to a long period of navel gazing and rejection of advanced mechanisation technology - both those contributed to the ease with which the western powers were able to to subjugate China's leadership (The Portuguese effort to destroy the Silk road and make themselves the dominant sea power by pounding african ports which had a long history of chinese trade flat - and "liberating" Burma from Mongol control had a lot to do with it too)

      However..... China's been defeated and invaded many times before. The standard tactic is to absorb the invaders over a couple of centuries. Just like Arnie "They'll be back". They've had a few false starts over the 20th century but they do seem to have found their footing now.

      One should be very careful about irritating dragons. For one is crunchy and goes well with ketchup.

  2. steve 124

    They can afford it

    After the past 3 years of absolutely gouging the hell out of the world, I think the dram makers can afford it. They should just be glad they aren't in jail at this point. I bought 32GB of ddr4 2400 for 116$ in summer of 2015, less than a year later the exact same kit was $340! Even China was investigating their price fixing (if China is saying something like that, you know it's getting crazy).

    Stock up everyone, this might be the year I build a new computer (if only the damn video card prices would fall a bit too).

  3. John Savard

    Forthcoming Event

    I'm sure the DRAM market will pick up when July 7 rolls around.

    1. eldakka Silver badge

      Re: Forthcoming Event

      If you are referring to Ryzen 2, as 7/7 is the release date (since it's manufactured on 7nm AMD get's a nice marketing tool by setting the date of release of 7nm parts as 7/7), I don't think it'll make much of an impact.

      In the global DRAM supply market, the consumer market is a tiny percentage. Even a large increase in a tiny percentage is still a tiny percentage in the global market perspective.

    2. bombastic bob Silver badge
      Trollface

      Re: Forthcoming Event

      All that needs to happen is for MICROSHAFT to introduce a new windows update that's a TOTAL RAM HOG, and the recommended FIX is a RAM UPGRADE.

      It wouldn't be much different than normal Win-10-nic feature creep anyway... maybe put the bloat feature into ".Not Core" or similar. Yeah, THAT would fix it! [*not*]

      That, and Firefox+Chrome browsers, "improving" their memory model or script speed but REQUIRING the extra RAM to make it work.

      Then it'd be like what happened with Vista, and when '9x first came out and we needed to upgrade our 386SX computers [that ran 3.x just fine] to 486DX2's and Pentiums with >16M because less than that ran POORLY with '9x...

  4. Denarius Silver badge
    Coat

    Curency value ?

    Most international currencies like US dollar are fiat currencies. China owns a lot of USA debt. IMHO, a power shift will happen when China decides it can bear the loss and crashes the US dollar. Watch for oil deals in roubles and yuan. After that the Merkins can send delegations via yatchts to PomLand and France to learn how to become a 2nd world tourist trap now their empire is gone.

    I agree with most of the assessments above. Global corps will increasingly avoid USA IP to avoid hassles. Also, as many originally big technology companies were USA in origin, there will be some confusion before general realisation strikes that only the C suite mostly lurks in USA. All real work, hardware and factory assembly is done in China. However, as Europe and USA go dark pushing renewables it is more likely all countries will have an economy crash after a mostly calm cold winter. If the western markets flounder Chinas leaders know they have a bigger problem. A suddenly impoverished middle class means instability. Flames welcome, it is a cold winter here.

    Mine's the thick heavy overcoat with the balance pole beside it.

    1. Charlie Clark Silver badge

      Re: Curency value ?

      Watch for oil deals in roubles and yuan.

      There's nothing in Roubles – that really is a basket case of currency – but Russia does do some energy trading with China without using the dollar. But the Renminbi is also not suitable for international trade because it is not fully convertible and hence not liquid enough. This is why the EU, together with Russia and China (and others who are keeping very quiet about it) is looking to setup EU backed and cleared SPVs for trading with regimes the US currently deem fit. But don't expect to read much about this as they'll be trying to keep as much as possible below the radar to stop the US pursuing even more aggressive policies.

      As for renewables: China is already the largest generator of both solar and wind power.

      1. Denarius Silver badge

        Re: Curency value ?

        Charlie, good points. However, China have to use their over-capacity solar panels somehow. Might be same for supermagnet factories also. Also, China is building interesting nuclear reactors suggesting a practical concern for long term energy security, unlike the suiciding West. I suspect the Party leadership also like to breath without coughing.

        As for currencies, The German Mark aka Euro might be valued at moment despite damage its use is causing in less efficient parts of Europe, (not sole cause I know), but still vulnerable when German economy goes into hard reverse.

        1. Alan Brown Silver badge

          Re: Curency value ?

          "I suspect the Party leadership also like to breathe"

          There, fixed that for you. See my other posts to understand why.

      2. Alan Brown Silver badge

        Re: Curency value ?

        "As for renewables: China is already the largest generator of both solar and wind power."

        The problem with renewables is that with the best will in the world. they simply can't generate enough electricity to decarbonise the world.

        They can generate enough to replace 2000s-level carbon-sourced electrical generation but that only accounts for about 30% of all carbon emissions. Tackling the other 70% takes somwhere between 6-8 times that capacity - and the only answer for that is nuclear power.

        China's been pulling out all the stops investing in ALL R&D paths whilst the west has stuck with fusion - which still won't be ready in my great-grandchildren's lifespans.

        We don't have that long. If the oceans get warm enough to start causing methane clathrate deposits to pop out (some are starting to bubble out already) then the result is likely to be a nasty positive feedback chain reaction resulting in most plant life being killed off by the resulting acidic rain caused by CO2 levels spiking a long way higher than they are now - not global warming - it's happened before in geological history and some estimates are that the entire scenario (including mass extinctions and oxygen levels plunging to 11-12%) played out in less than a decade each time.

        If China gets usable _safer_ nuclear online (based on the molten salt tech that Nixon killed in 1972), then they may just be the worldsavers we didn't know we needed.

  5. Roj Blake

    Will demand really drop?

    I get that Huawei may not need as much RAM because they won't be selling as many phones. But surely the people who want to buy a new phone will buy alternatives instead, thus requiring Samsung/Moto/LG whoever to buy more memory?

    1. Bugsy11

      Re: Will demand really drop?

      You are probably right to ask that question. I doubt demand will drop. Demand will just shift over to new buyers, i.e., the Samsung, et. al. group that manufacture their phones outside of Middle Kingdom. Users are not going to wait around for Huawei to create a new ecosystem, Lol.

  6. Henry Wertz 1 Gold badge

    world's smallest violin

    Here I am playing the world's smallest violin... hynix, Samsung, and micron have been fined roughly every 5 years for SEVERAL DECADES for price fixing. A real shame they won't make those cartel profit margins for a few quarters...

  7. GlazedDonut

    Incredibly short term concerns, a long term diversified supply chain is more resilient to price swings.

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