Hardware

From what I understand the memory providers like Samsung are getting paid. There's a whole chain of companies that goes into the whole AI thing. The more you get to the top, the more nebulous and bullshit you get. The further you get to the bottem, the more concrete and real it gets.

Samsung is closer to the bottom than the top, selling actual physical chips and getting paid to do so. They benefit from the increased demand, which has made them raise prices. This is the windfall the workers are upset about. Manufacturers like Samsung aren't going to sell their product without receiving the money, they have plenty of other customers to sell to. So when we see AI companies getting a whole lot of funding from VC and burn through it, a lot of that money ends up in the hands of the companies that make the actual hardware.

Not to say Samsung and similar companies are totally insulated from the BS. One of the things they are struggling with is contracts to purchase hardware in the future. Everything sold today is a simple transaction, hardware for money. But those AI companies (via the chain) have placed orders for future demands. This could mean building more fabs and setting up a larger production volume. But that's not what's happening, because these memory suppliers have been around the block a few times already. They know that these kinds of hype cycles tend to fall back down in short order, leaving them with huge running costs and a large supply, without any customers. So what they have opted for now is to dedicate current production lines to make as much as they can, and started converting other production lines to also create the more in demand products right now. The large amount of automation means this is simpler now than ever before, but still a very large and complex task, so it takes a while.

Unfortunately that means the regular consumer stuff is put on the back burner, driving up prices for things like laptops, phones, ram sticks and GPUs by a lot. And that isn't going to get better, unless the AI demand proves to be sustainable (which it probably isn't). If the AI demand stays high, more fabs will be created to increase supply for stuff other than enterprise AI hardware. But the expectation is a lot of these AI companies are going to fold this year or next year. Those future orders will turn out not to be needed, so the companies will turn those converted production pipelines back into their original purpose.

So in three or four years time, we will get some sort of normal pricing again. Unfortunately due to inflation, it's not expected for prices to actually come down, just not rise as quickly.