Memory Pricing Pressures, Meta's Muse AI, and the Agentic CPU Crunch

Ben Bajarin (0:05)

Hello, everyone, welcome to another episode of The Circuit, I am Ben Bajarin.

Jay Goldberg (0:09)

Greetings programs, I am Jay Goldberg.

Ben Bajarin (0:12)

Well we return to our regularly scheduled programming of Just Ben and Jay after back-to-back weeks of guests, which we appreciate the feedback on all of that. But now it's us two cranking away on hot topics of the week.

Jay Goldberg (0:31)

The two of us and the rooster.

Ben Bajarin (0:33)

No, my rooster, like, I shut the window, and it's midday, they're not crowing so much. I appreciate their feedback, I know some people don't love, we have very loud roosters sometimes in the morning, and they're not far from my window, so be it.

All right, let's start with memory, and in particularly, the, what are we gonna say, the fourth and fifth horsemen of the memory apocalypse, the Chinese players, who are obviously ramping capacity. We see a lot of news come across the chatter sphere, the discords and the slacks that we're in around that, so they're moving quick. You know, the Chinese memory guys, I know. So you had a take.

Jay Goldberg (1:25)

Yeah, I mean, I saw a lot of headlines this week, or a lot of chatter, about both CXMT, who does DRAM, and YMTC, which does NAND, are accelerating various parts of their program. It sounds like CXMT has pulled forward some of its capacity expansion.

Oh no, sorry, YMTC has pulled forward some of its capacity expansion. CXMT is on track to add another 100,000 wafers per month by the end of next year. So that's a 33% increase for them year on year in capacity.

And then CXMT also sounds like they're making a lot of progress in sort of just developing the quality of their product. I've heard different rumors of what that means, but it sounds like their yields are improving and they're starting to branch out in different flavors of DRAM. So not like the sky is falling, China is coming kind of news, but just a periodic reminder that these are serious providers of memory and they are getting better and bigger pretty quickly.

Ben Bajarin (2:36)

Yeah. Yeah, and I think the...

You're already hearing... I mean, look, at the end of the day, there's a lot of OEMs, and I know it's not just the Chinese OEMs, who would love some release to the pricing pressure. I saw two different forecasts come out earlier in the week, downgrading consumer devices in volume, really across the board. I mean, it was everything. It wasn't just PCs, it was phones and everything because of the memory price bug, which I think is a fair downgrade in consumer electronics. It's rough. It's rough out there. It's going to be ugly in consumer hardware for the foreseeable future.

Jay Goldberg (3:22)

I don't know. I'm starting to hear different rumblings. Like, I mean, this is mostly coming from interested parties like memory company CEOs, but it sounds to me like there is some plateauing of consumer grade memory.

Ben Bajarin (3:38)

Pricing, you mean? Yeah.

Jay Goldberg (3:40)

Pricing, yeah.

And I've heard that from a couple of people. I don't know how much I believe it, but like I think the consumer side would really, really appreciate that now. Just a little bit of because and I think if the memory makers are smart about it, they'll realize they really have two very distinct customer groups. One customer group is very price sensitive, consumers, the other side doesn't really care about price and will take all the memory they can get in the data center. And I think the memory guys will see a way to sort of balance that. I mean, it's not an uncommon problem, market segmentation. So I think there may be at least, I mean, I don't think memory is getting cheaper in consumer, but maybe prices stop going up again, as opposed to data center pricing, memory is just going to keep going up.

Ben Bajarin (4:35)

Yeah. Well, but okay, so here's a nugget that I had found out.

So there are certain skews of memory size, you know, gigabytes that aren't normally in a skew, or at a base slash entry skew, that are cheaper than some memory that's less than that gigabytes. But the OEMs don't want to move up into that price, because once you increase your storage or your memory, there's really no backtracking from that, even if it's less expensive than a lower tier of memory. And so you kind of have this dynamic of, like future proofing planning to make sure that you're not stuck at a certain tier that historically is more expensive than a lower storage or memory tier. And that's creating some really interesting dynamics as to where pricing increase is happening, what they do with SKUs, how those prices go into certain SKUs. So it's just different navigation, right? You've got to manage through.