--- title: "AI Capacity Grab Intensifies! Samsung Electronics and SK Hynix Sign Long-Term Contracts to Lock in Supply, Memory Prices May Be \"Contractually Inflated\"" type: "News" locale: "en" url: "https://longbridge.com/en/news/285051516.md" description: "Long-term memory contracts may be shifting from a tool to \"smooth out volatility\" into a driver pushing up prices. Driven by AI demand, Samsung Electronics and SK Hynix are accelerating the promotion of multi-year supply agreements (LTAs). Major customers are willing to pay a premium to secure capacity, while unsigned buyers may be forced to bear higher costs in a tightening spot market. Analysts believe that the widespread adoption of LTAs could systematically raise the central pivot of memory prices" datetime: "2026-05-04T09:33:31.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/285051516.md) - [en](https://longbridge.com/en/news/285051516.md) - [zh-HK](https://longbridge.com/zh-HK/news/285051516.md) --- # AI Capacity Grab Intensifies! Samsung Electronics and SK Hynix Sign Long-Term Contracts to Lock in Supply, Memory Prices May Be "Contractually Inflated" Long-term memory contracts may be shifting from a tool to "smooth out volatility" into a driver pushing up prices. Driven by AI demand, Samsung Electronics and SK Hynix are accelerating the promotion of multi-year supply agreements (LTAs). Major customers are willing to pay a premium to secure capacity, while unsigned buyers may be forced to bear higher costs in a tightening spot market. Analysts believe that the widespread adoption of LTAs could systematically raise the central pivot of memory prices. ## **How Long-Term Contracts Reverse-Push Prices Higher** Samsung Electronics stated in its latest earnings conference call that major customers, based on strong expectations for AI demand, are actively seeking to lock in medium-to-long-term supply volumes, and the company has signed some multi-year contracts. According to analysts' interpretation, the original intent of LTAs was to reduce cyclical fluctuations in the industry. However, in the current environment of tightening supply, contracting parties pay a premium for certainty, while non-contracting parties passively accept higher spot prices—pushing price levels up from both ends. The Financial Times pointed out that the current memory market is already a "seller's market," and the supply-demand imbalance is expected to last at least until 2028. Analysts predict that if memory prices rise by 50% quarter-on-quarter in the second quarter, manufacturers' profit margins could exceed 80%. In addition, the expansion of three-to-five-year long-term contracts is expected to weaken the industry's reliance on cyclical businesses such as mobile phones and PCs. ## **Increased Prepayments, Price Floors Written into Contracts** South Korean memory manufacturers are collectively increasing the proportion of prepayments for LTAs, which previously generally remained below 5% across the industry. Notably, SK Hynix's recent long-term contracts with Microsoft and Google have raised prepayments to 10%–30% of the total contract value and established minimum price clauses for the contract period. If buyers fail to take delivery of the agreed volume after signing, the prepayment will be forfeited as a penalty for breach of contract. Specifically, the core of SK Hynix's agreement with Microsoft is a three-year supply of DDR5 starting this year, with the contract scale expected to reach tens of billions of US dollars. Negotiations with Google involve a five-year long-term contract for commodity DRAM, potentially including a two-year extension clause linked to the supply of next-generation HBM. ### Related Stocks - [SMSN.UK](https://longbridge.com/en/quote/SMSN.UK.md) - [SSNGY.US](https://longbridge.com/en/quote/SSNGY.US.md) - [SMH.US](https://longbridge.com/en/quote/SMH.US.md) - [07747.HK](https://longbridge.com/en/quote/07747.HK.md) - [SOXL.US](https://longbridge.com/en/quote/SOXL.US.md) - [07709.HK](https://longbridge.com/en/quote/07709.HK.md) - [SMH.UK](https://longbridge.com/en/quote/SMH.UK.md) - [MSFT.US](https://longbridge.com/en/quote/MSFT.US.md) - [GOOGL.US](https://longbridge.com/en/quote/GOOGL.US.md) - [GOOG.US](https://longbridge.com/en/quote/GOOG.US.md) ## Related News & Research - [South Korea's 55% Market Surge Has Sparked An ETF Boom — But It's Really An AI Chip Bet](https://longbridge.com/en/news/284935675.md) - [Samsung, SK Hynix flag record supply squeeze in memory market as AI demand soars](https://longbridge.com/en/news/284773018.md) - [Loblaw Partners with Shakudo to Centralize, Speed Up AI Development](https://longbridge.com/en/news/285069193.md) - [Bridging the gap: Legacy tools gain enterprise AI support](https://longbridge.com/en/news/285008251.md) - [LatticeFlow AI Launches the First Public Registry of AI Frameworks Mapped to Ready-to-Run Evaluations](https://longbridge.com/en/news/284704311.md)