Memory suppliers lock customers into 3-to-5-year chips as AI shortages persist
Memory chip makers including Samsung Electronics Co., SK Hynix Inc., and Micron Technology Inc. are securing long-term agreements (LTAs) spanning three to five years with major customers, locking in unprecedented pricing power as demand from AI and robotics outpaces supply. According to industry observers, suppliers currently operate with gross margins above 90% and operating margins around 80%. Notably, tech companies have proactively requested contracts extending through 2028 or 2030, even while aware that new fabrication capacity from Samsung and SK Hynix will begin contributing to global supply in 2028.
The long-term contracts vary in pricing mechanics. SK Hynix has implemented LTAs with price floors but no price ceilings, while Samsung and Micron are understood to include both. A structural feature across the deals is the collection of upfront advance payments, which Micron presumes will be refundable if customers maintain the contracts, whereas others deduct the funds from future revenue. The shift involves all five major memory producers—Samsung, SK Hynix, Micron, Kioxia, and SanDisk—and addresses a supply-demand mismatch that executives expect to intensify through 2027 before easing.
From the sources (3 posts)
@jukan05KIS: On Memory LTAs With suppliers' commodity DRAM operating margins already at 80% and gross margins above 90%, prices cannot be raised endlessly on supply and demand dynamics alone. What matters is that at price levels where supplier ope
@dnystedtRT @mingchikuo: The memory supply-demand gap will keep widening through 2027. That is the real reason Apple is lobbying the White House to…
@dudette1508The memory shortage isn't ending. Executives from SK Hynix, Micron, and Samsung agree: the supply-demand mismatch will intensify through 2027, with shortages lasting into 2028. Why? Massive context windows and the rise of robotics. 🧵 #memo