Every GPU sold requires huge quantities of expensive RAM and availability of that RAM is what determines how many chips Nvidia or AMD can sell. Somehow Nvidia warrants a P/E ratio of 50 but Micron only a 5 even though Nvidia is the one holding it's bowl out at the doorstep of the memory fabs. Nvidia's next generation of cards is delayed and entirely dependant on supply of DDR6. I honestly don't get why people buy Nvidia over Micron.
Memory is baked into so many products now that the market demand is nearly in crisis. Tensor cores, video surveillance, portable VR, autonomous machines, crypto-currency... memory is a commodity that is suddenly found to be so much more ubiquitous than it used to be. Historic trends of even two years ago have no relevance anymore.
There is also an AI cold war brewing and Micron is the only large US based manufacturer of memory. The US government will not allow it to fail. China can't afford to tariff Micron either because they have no domestic fabs and want all the AI resources they can buy. They are desperate to get their own production online but that will take years and the AI supremacy war will be in full swing by then. China will consume all the resources it can manufacture and would be reluctant to allow it's foundries to fuel foreign AI regardless.
There will be an explosion of demand in the next five years and the projected supply increase will not be able to keep up.
The current value of Micron has an assumption that the price of RAM will crash already baked in. If it doesn't crash, the current valuation of the company is low by a magnitude. It's absurd. I'm growing suspicious of anyone bearish on Micron as being part of a propaganda machine.
Submitted April 11, 2018 at 09:05PM by sasksean https://ift.tt/2qpHODU
