- Samsung and SK Hynix are moving away from short-term or annual sales in favor of binding three to five-year agreements with major tech firms.
- These long-term deals allow memory makers to partner with clients during the initial design phases of AI hardware.
- Locking in prices and volumes for several years reduces the financial risk of sudden market downturns.
Samsung and SK Hynix are making a move at a critical time for the memory industry, transitioning from one-year memory supply contracts and, in some cases, quarterly contracts to three- to five-year deals with major technology companies.
According to Aju News, both companies plan to use Long-Term Agreements (LTAs) to sell products and engage with clients, starting in the early phases of AI memory development. This information placed the move within new agreements signed with important clients in 2026, putting smaller companies at a disadvantage compared to the giants.
This information further indicates that Samsung has agreed that, beginning this year, new contracts with major clients will have a minimum duration of 3 years under an LTA framework. Also, Samsung was still accepting “quarterly” contracts until 2025, when it shifted to weekly contracts due to the market’s rapid pace.
Moreover, it includes a statement made at the general meeting on March 18 by Jun Young Hyun, vice president and head of DS, stating that the company is pushing for a change from annual or quarterly contracts to multi-year agreements lasting 3 to 5 years.
The article provides additional information suggesting that under this deal, Samsung would offer memory to businesses such as Microsoft and Google for a three-year period. SK Hynix is negotiating a five-year general-purpose DRAM supply contract with Google. Initially, a three-year contract was proposed, but the term was extended to five years after an internal assessment found it was too short.
SK Hynix is Google’s preferred supplier for 5th-generation HBM3E. Based on this, the negotiations would include the prospect of finalizing the deal in the first half of the year, which would shorten the schedule from the original goal of completing it in the year.
To provide some context, in the previous model, conventional memory for PCs, laptops, and mobile devices was sold at quarterly or daily spot-market pricing, so a decline in demand could lead to rapid price drops and major losses.
In terms of the impact of LTAs, three specific issues are highlighted as lowering the risk of an order gap: securing price and volume for 3 or even 5 years, researching supply pricing policies and minimum yearly quantities, and budgeting CAPEX more precisely by committing a portion of the volume.
It’s reported that, with products like HBM memory, which have greater process complexity and varying customer needs, a method similar to that of traditional chip makers like Intel or TSMC is used: order first, then produce.
Concluding this ends with that news; this protects both companies but puts additional pressure on their consumers, who must be confident that their hardware investments will provide a large return in three to five years to begin compensating for current expenses. If the bubble bursts sooner, pandemonium is certain; if they succeed, their move is extremely advantageous compared to their competitors’.
Thank you! Please share your positive feedback. 🔋
How could we improve this post? Please Help us. 😔
[Editor-in-Chief]
Sajjad Hussain is the Founder and Editor-in-Chief of Tech4Gamers.com. Apart from the Tech and Gaming scene, Sajjad is a Seasonal banker who has delivered multi-million dollar projects as an IT Project Manager and works as a freelancer to provide professional services to corporate giants and emerging startups in the IT space.
Majored in Computer Science
13+ years of Experience as a PC Hardware Reviewer.
8+ years of Experience as an IT Project Manager in the Corporate Sector.
Certified in Google IT Support Specialization.
Admin of PPG, the largest local Community of gamers with 130k+ members.
Sajjad is a passionate and knowledgeable individual with many skills and experience in the tech industry and the gaming community. He is committed to providing honest, in-depth product reviews and analysis and building and maintaining a strong gaming community.
Join Our Community
