[News] Samsung, SK hynix Deepen LTAs as Buyers Pay Premiums to Secure Supply, May Drive Memory Prices Higher

Memory Makers’ push to expand long-term contracts is reshaping memory market dynamics, with potential implications for pricing. According to Fnnews, citing analysts, the broader use of long-term supply agreements (LTAs) by Samsung Electronics may, paradoxically, drive prices higher and introduce a premium into the memory market.

At its earnings call, Samsung Electronics said major clients are looking to secure mid- to long-term volumes on expectations of strong AI demand, according to Chosun Biz, adding that it is pursuing multi-year contracts and has already signed some agreements.

As the report explains, LTAs—originally intended to reduce industry-wide price volatility—could, in the near term, instead lift overall price levels. This reflects a shift in customer priorities: securing long-term supply has become more critical, even at the cost of accepting higher prices. At the same time, customers without LTAs may be forced to pay a higher price to access constrained spot supply.

Building on this shift, Maeil Business Newspaper notes that the move toward three- to five-year agreements could reduce the memory industry’s reliance on cyclical segments such as smartphones and PCs, while strengthening more stable, structural growth drivers. Analysts cited in the report add that if memory prices rise by up to 50% quarter over quarter in the second quarter, profit margins could exceed 80%.

Maeil Business Newspaper, citing Financial Times, further notes that the memory market is currently a “producer’s market” amid tightening supply conditions, with industry expectations that the imbalance could persist through at least 2028.

Memory Suppliers Reinforce LTAs with Higher Prepayments and Price Floors

In addition, Korean memory makers are reportedly lifting LTA advance payments well above the previous sub-5% level, according to Green Economy News. Under these agreements, suppliers can retain the upfront payment as a penalty if buyers fail to take committed volumes after signing.

Green Economy News adds that SK hynix is structuring recent long-term DRAM deals with Microsoft and Google to include advance payments of roughly 10%–30% of total contract value, along with clauses securing a minimum price over the contract term. The core of SK hynix’s agreement with Microsoft is a three-year DDR5 supply starting this year, with the deal expected to be worth tens of billions of dollars. With Google, the company is discussing a long-term contract for general-purpose DRAM of up to five years, with a possible two-year extension tied to the supply of next-generation HBM, the report adds.

Read more

• [News] Samsung Reportedly Eyes Long-Term Memory Deals with Google, Microsoft; May Include $10B+ Prepayments
• [News] From Annual Deals to 3–5 Year LTAs: Samsung and SK hynix Reportedly Reset Big Tech Memory Contracts

(Photo credit: Samsung)