The UK’s Telegraph newspaper is claiming that “spending cuts at OpenAI have hit memory chip prices.” That sounds like potentially good news on several levels. But does it stack up?
As we reported, OpenAI shuttered its Sora video-generation tool last week. The AI outfit also cancelled a multi-billion-dollar deal with Oracle to extend the Stargate data center in Texas.
Broadly, OpenAI is seen as cutting back on costs. Whether that’s because the money is actually running out or, in fact, OpenAi wants to polish its books before a stock market flotation that’s been mooted for later this year is an open question. But spending at OpenAI has undeniably been cut and that likely means at least some reduction in demand for memory chips, which has been running at record levels.
The Telegraph points out the market analyst Trendforce has tracked memory chip prices rising by 700% over the past year. That’s obviously been reflected in ballooning costs for PC components like DDR5 RAM kits.
But the Telegraph notes that DDR5 memory kits on Amazon have dropped by as much as $100 from their AI-fuelled peak. Scanning through some of the kit prices I tracked late least year, and the picture is mixed.
This Corsair 32 GB kit, for instance, is now $370, down from the $410 it hit in December. This Kingston 16 GB kit, meanwhile, peaked at $350 and can now be bought for $261, albeit it has usually been unavailable.
However, if you observe the price trend of the 32 GB version of that Kingston kit, you’ll see that the price has been essentially oscillating between $657 and around $515 since February, with it mostly being listed at the lower price.
Certainly, it’s hard to look at the historic price graph for that kit and conclude that the price is now falling. To be honest, you wouldn’t expect that even if OpenAI’s recent cutbacks are having an impact on memory chip prices. It would take longer than that to feed into PC memory kit prices.
Of course, equally it’s hard to know how much of current price rises for computing hardware are down to real supply and demand constraints as opposed to panic buying and price gouging. If it’s largely the latter, then it might not take much more than a change in market sentiment thanks to OpenAI’s cut backs to see memory pricing tumbling.
However, if the price rises are more structural than sentiment-based, then it will likely take more than OpenAI becoming more circumspect with its spending to normalise the DDR5 market.
A clear dip in DDR5 memory kit pricing isn’t immediate obvious. (Image credit: Amazon)
Indeed, the narrative of late has been about an expansion of the supply crunch to include CPUs as the AI industry moves from its initial development and training phase into compute loads that are more inference and agentic. That will shift some of the details around component demand. But not memory. Whether you are training, inferencing or inferencing at the behest of agentic models, you’re going to want plenty of money.
Heck, another story doing the rounds is that automated cars and robots will soon be gobbling up 300 GB a pop, implying that the memory crunch is set to get worse, not better. On the other hand, Google reckons its new AI algorithm reduces memory demand by 6x, so there’s that.
All of which means that the Telegraph has probably jumped the gun on this one. There are just so many other demand-driving vectors in flight right now when it comes to the AI boom, it would certainly be premature to conclude that one single factor—OpenAI reducing spending—was going to have a tangible impact.
For now, then, let’s just say the guidance probably remains the same. This whole mess still looks likely to get worse before it gets better, especially with conflict in the Gulf adding another hugely volatile and potentially damaging variable into the mix.
