Samsung and SK Hynix are changing how they sell memory as artificial intelligence customers create strong demand for DRAM, high bandwidth memory and enterprise storage.
Instead of depending mainly on short term orders, both companies are placing greater emphasis on long term agreements. These contracts can provide more predictable revenue, advance payments and stronger protection when demand falls.
The memory industry has traditionally moved through sharp growth and decline cycles. Manufacturers often increase production when prices rise, only to face oversupply when customer demand weakens. That can lead to falling prices, unused inventory and large financial losses.
Long term contracts do not remove every risk, but they can make the business more stable by locking in supply commitments over several years.
| Contract feature | Possible benefit |
|---|---|
| Multi year supply agreement | Provides clearer demand forecasts |
| Advance payment | Helps fund production before delivery |
| Minimum purchase commitment | Reduces the risk of unused inventory |
| Annual renegotiation | Gives customers some pricing flexibility |
| Coverage across several products | Supports DRAM, HBM and enterprise SSD sales |
AI demand has shifted negotiating power toward memory suppliers
Samsung and SK Hynix currently hold a stronger position because AI infrastructure requires large amounts of memory.
Data centres need conventional DRAM for servers, HBM for accelerators and high capacity storage for training and running AI systems. This demand has allowed major suppliers to request longer commitments from customers that need guaranteed access to limited production capacity.
In earlier market conditions, large buyers could place short term orders and adjust them when demand changed. That approach placed much of the financial risk on memory manufacturers, which had already invested in factories, equipment and production.
There were also cases where a customer could reduce or reject additional shipments after a supplier had already prepared the required memory. When supply was easy to find, buyers had more freedom to renegotiate or move orders elsewhere.
The current shortage has changed that balance. Customers now have a stronger reason to secure supply in advance, while manufacturers can ask for deposits and minimum commitments before allocating production.
Five year agreements can protect manufacturing investments
Samsung has reportedly secured agreements lasting at least five years with some AI customers. These contracts may include advance payments that arrive before production is completed.
This structure can help protect the company if a recession reduces technology spending. Samsung would still receive compensation for manufacturing capacity reserved under the agreement, even if the customer later faces weaker demand.
Long term contracts are also useful because advanced memory production requires major investment. Building fabrication capacity, buying equipment and improving manufacturing processes can cost billions of dollars. A multi year commitment gives suppliers more confidence that those investments will generate revenue.
The agreements are said to cover more than standard DRAM. They may also include HBM and enterprise solid state drives, allowing customers to secure several parts of their AI infrastructure supply through one broader arrangement.
Annual renegotiation clauses may provide some flexibility. Customers could review prices and terms every 12 months rather than remaining locked into the exact same conditions for the full contract period.
Customers still have alternatives, but their choices are limited
Companies that reject the terms offered by Samsung can approach other memory suppliers. However, the number of major alternatives remains small.
SK Hynix and Micron are among the largest established suppliers outside Samsung. China’s CXMT is another option, but its DDR5 products have reportedly been priced above comparable Samsung memory in some situations.
Other suppliers may also require long term contracts and large deposits because production capacity remains limited. This means buyers cannot necessarily avoid the new contract model simply by changing manufacturers.
The result is a market where several suppliers are asking customers to share more of the financial risk. Instead of memory companies producing large volumes based on uncertain forecasts, customers must reserve capacity and commit earlier.
The new model may continue while shortages remain
The current contract structure has been supported by supply constraints and strong AI demand. Those conditions are expected to remain influential for several years, with shortages potentially continuing until 2028.
If supply eventually catches up with demand, buyers may regain more negotiating power. Memory manufacturers could face pressure to accept shorter contracts, lower deposits or more flexible purchasing terms.
Samsung and SK Hynix may still try to preserve parts of the new model because it provides greater stability than the previous system. Long term agreements can help reduce the impact of sudden price declines and make future production planning more accurate.
The memory market will not become completely recession proof. AI spending could slow, customers could reduce expansion plans and new competitors could add supply. However, Samsung and SK Hynix have changed the way those risks are distributed.
Their new approach places more responsibility on customers through advance payments and multi year commitments. For the manufacturers, that creates a stronger defence against the severe downturns that have repeatedly affected the DRAM industry.
Samsung and SK Hynix are changing how they sell memory as artificial intelligence customers create strong demand for DRAM, high bandwidth memory and enterprise storage.
Instead of depending mainly on short term orders, both companies are placing greater emphasis on long term agreements. These contracts can provide more predictable revenue, advance payments and stronger protection when demand falls.
The memory industry has traditionally moved through sharp growth and decline cycles. Manufacturers often increase production when prices rise, only to face oversupply when customer demand weakens. That can lead to falling prices, unused inventory and large financial losses.
Long term contracts do not remove every risk, but they can make the business more stable by locking in supply commitments over several years.
| Contract feature | Possible benefit |
|---|---|
| Multi year supply agreement | Provides clearer demand forecasts |
| Advance payment | Helps fund production before delivery |
| Minimum purchase commitment | Reduces the risk of unused inventory |
| Annual renegotiation | Gives customers some pricing flexibility |
| Coverage across several products | Supports DRAM, HBM and enterprise SSD sales |
AI demand has shifted negotiating power toward memory suppliers
Samsung and SK Hynix currently hold a stronger position because AI infrastructure requires large amounts of memory.
Data centres need conventional DRAM for servers, HBM for accelerators and high capacity storage for training and running AI systems. This demand has allowed major suppliers to request longer commitments from customers that need guaranteed access to limited production capacity.
In earlier market conditions, large buyers could place short term orders and adjust them when demand changed. That approach placed much of the financial risk on memory manufacturers, which had already invested in factories, equipment and production.
There were also cases where a customer could reduce or reject additional shipments after a supplier had already prepared the required memory. When supply was easy to find, buyers had more freedom to renegotiate or move orders elsewhere.
The current shortage has changed that balance. Customers now have a stronger reason to secure supply in advance, while manufacturers can ask for deposits and minimum commitments before allocating production.
Five year agreements can protect manufacturing investments
Samsung has reportedly secured agreements lasting at least five years with some AI customers. These contracts may include advance payments that arrive before production is completed.
This structure can help protect the company if a recession reduces technology spending. Samsung would still receive compensation for manufacturing capacity reserved under the agreement, even if the customer later faces weaker demand.
Long term contracts are also useful because advanced memory production requires major investment. Building fabrication capacity, buying equipment and improving manufacturing processes can cost billions of dollars. A multi year commitment gives suppliers more confidence that those investments will generate revenue.
The agreements are said to cover more than standard DRAM. They may also include HBM and enterprise solid state drives, allowing customers to secure several parts of their AI infrastructure supply through one broader arrangement.
Annual renegotiation clauses may provide some flexibility. Customers could review prices and terms every 12 months rather than remaining locked into the exact same conditions for the full contract period.
Customers still have alternatives, but their choices are limited
Companies that reject the terms offered by Samsung can approach other memory suppliers. However, the number of major alternatives remains small.
SK Hynix and Micron are among the largest established suppliers outside Samsung. China’s CXMT is another option, but its DDR5 products have reportedly been priced above comparable Samsung memory in some situations.
Other suppliers may also require long term contracts and large deposits because production capacity remains limited. This means buyers cannot necessarily avoid the new contract model simply by changing manufacturers.
The result is a market where several suppliers are asking customers to share more of the financial risk. Instead of memory companies producing large volumes based on uncertain forecasts, customers must reserve capacity and commit earlier.
The new model may continue while shortages remain
The current contract structure has been supported by supply constraints and strong AI demand. Those conditions are expected to remain influential for several years, with shortages potentially continuing until 2028.
If supply eventually catches up with demand, buyers may regain more negotiating power. Memory manufacturers could face pressure to accept shorter contracts, lower deposits or more flexible purchasing terms.
Samsung and SK Hynix may still try to preserve parts of the new model because it provides greater stability than the previous system. Long term agreements can help reduce the impact of sudden price declines and make future production planning more accurate.
The memory market will not become completely recession proof. AI spending could slow, customers could reduce expansion plans and new competitors could add supply. However, Samsung and SK Hynix have changed the way those risks are distributed.
Their new approach places more responsibility on customers through advance payments and multi year commitments. For the manufacturers, that creates a stronger defence against the severe downturns that have repeatedly affected the DRAM industry.
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