Contrary to typical competitive behavior, major memory chip manufacturers intentionally limit their market share with any single customer. They prefer their clients, like Dell, to be multi-sourced from their competitors. This ensures a more resilient and stable supply chain for the entire ecosystem, prioritizing long-term stability over short-term dominance.

Unlike past cycles driven solely by new demand (e.g., mobile phones), the current AI memory super cycle is different. The new demand driver, HBM, actively constrains the supply of traditional DRAM by competing for the same limited wafer capacity, intensifying and prolonging the shortage.

The growth of AI is constrained not by chip design but by inputs like energy and High Bandwidth Memory (HBM). This shifts power to component suppliers and energy providers, allowing them to gain leverage, demand equity, and influence the entire AI ecosystem, much like a central bank controls money.

Tech giants often initiate custom chip projects not with the primary goal of mass deployment, but to create negotiating power against incumbents like NVIDIA. The threat of a viable alternative is enough to secure better pricing and allocation, making the R&D cost a strategic investment.

With new factory capacity years away, the only immediate lever for increasing DRAM supply is "node migration." This involves shifting production to more advanced manufacturing processes (like 1B and 1C) that can produce more memory bits per silicon wafer. The speed of this migration is the critical factor for easing supply.

NVIDIA's annual product cadence serves as a powerful competitive moat. By providing a multi-year roadmap, it forces the supply chain (HBM, CoWoS) to commit capacity far in advance, effectively locking out smaller rivals and ensuring supply for its largest customers' massive build-outs.

Producing specialized High-Bandwidth Memory (HBM) for AI is wafer-intensive, yielding only a third of the memory bits per wafer compared to standard DRAM. As makers shift capacity to profitable HBM, they directly reduce the supply available for consumer electronics, creating a severe shortage.

In a surprising market inversion, the price surge for commodity DRAM has become so extreme that its profit margins now exceed those of specialized High-Bandwidth Memory (HBM). This creates a strategic dilemma for producers, forcing them to balance short-term profits against long-term AI market position.

Despite record profits driven by AI demand for High-Bandwidth Memory, chip makers are maintaining a "conservative investment approach" and not rapidly expanding capacity. This strategic restraint keeps prices for critical components high, maximizing their profitability and effectively controlling the pace of the entire AI hardware industry.