--- title: "Breaking Industry Conventions! Report: SK Hynix Long-Term Agreement Prices Have \"No Cap,\" Pricing Game Heats Up Completely" type: "News" locale: "en" url: "https://longbridge.com/en/news/291372031.md" description: "SK Hynix's Long-Term Agreements (LTA) break convention by setting no \"price cap,\" making it the only memory manufacturer in the market that can fully enjoy the benefits of surging spot prices when supply and demand tighten. Meanwhile, it has extended the LTA term to three to five years. In contrast, while Micron's new LTAs set a cap based on market prices in the second quarter of 2026, the gross margin corresponding to its price floor far exceeds historical peaks. The two giants have different pricing models, but both reflect a systemic strengthening of their bargaining power" datetime: "2026-07-01T06:01:14.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/291372031.md) - [en](https://longbridge.com/en/news/291372031.md) - [zh-HK](https://longbridge.com/zh-HK/news/291372031.md) --- # Breaking Industry Conventions! Report: SK Hynix Long-Term Agreement Prices Have "No Cap," Pricing Game Heats Up Completely SK Hynix has carved out a new path in the pricing structure of long-term memory supply contracts, positioning itself to reap price premiums far exceeding those of its peers in the next cycle of tightening supply and demand. According to the latest report from Digitimes, the Long-Term Agreements (LTA) recently signed by SK Hynix with customers adopt a model with no price cap, forming a clear distinction from the common practice of competitors like Micron, which set a "Ceiling Price" in their contracts. **This arrangement makes SK Hynix the only memory manufacturer in the current market not constrained by a price cap.** The core logic of this strategy is that once the market enters a phase of supply shortage, SK Hynix can fully capture the revenue generated by soaring spot prices, rather than being forced to ship at levels below market price due to contractual caps. At the same time, driven by the continuous expansion of AI infrastructure demand, both SK Hynix and Samsung have extended the term of their LTAs from the previous one year to three to five years, further locking in long-term customer demand. In contrast to SK Hynix's strategy, **competitors like Micron still retain price cap clauses in their LTAs.** Micron disclosed 16 Strategic Customer Agreements (SCA) on June 25, which set a price cap for existing products anchored to the market price in the second quarter of 2026. However, the price floor in these agreements is equally noteworthy—the gross margin corresponding to the floor is "far higher than the profit peak of any historical cycle." ## SK Hynix: No Ceiling, Betting on Full Upside Elasticity from Price Hikes The core difference in SK Hynix's current LTA strategy lies in abandoning the price cap arrangement traditionally used in long-term contracts to exchange for customer volume commitments. Under the traditional long-term memory contract model, suppliers typically sacrifice upside potential in exchange for volume certainty; **however, SK Hynix has broken with convention this time. Once the market enters a tight supply situation and prices rise rapidly, its contractual revenue will not be constrained by a cap, allowing it to fully follow the upward movement of market prices—making it the only memory manufacturer in the current market without a price cap.** Regarding contract terms, in response to the significant growth in AI demand, both SK Hynix and Samsung have adjusted their supply agreements from one-year terms to long-term contracts of three to five years. The longer contract term itself implies that customers have incorporated memory supply into their strategic planning for a longer cycle, thereby enhancing the bargaining chips of leading suppliers. ## Micron Pricing Structure Comparison: Trading Ceiling for Certainty, Floor Locks in Peak Profits Micron's SCA pricing framework falls into three categories: fixed prices, price ranges with upper and lower limits, or references to market prices floating within a similar range. **For existing products, the price cap references the market price in the second quarter of 2026, which some market participants interpret as Micron "actively locking down the space for price increases."** However, Morgan Stanley analyst Joseph Moore pointed out in a research report that the duration of the contract is the core dimension for assessing its value; gross margins are approaching 90% and are expected to remain at this level for a considerable period—it is reasonable for counterparties to seek certain protections in negotiations. The implication of the price floor is even more critical: the gross margin corresponding to the floor is "far higher than the profit peak of any historical cycle." Micron's historical peak gross margin was approximately 62%, while it has already reached 84.9% in the current quarter—even if the agreement triggers the floor clause, the profitability level will still significantly surpass the best periods in history. For new products, the agreements also retain additional upside pricing space. In comparison, SK Hynix's no-cap LTA strategy represents a different trade-off: sacrificing pricing certainty in exchange for full elasticity during price hike cycles. The two models correspond to different risk appetites and market judgments, jointly pointing to a systemic strengthening of the bargaining power of leading memory manufacturers. ### Related Stocks - [MU.US](https://longbridge.com/en/quote/MU.US.md) - [MUD.US](https://longbridge.com/en/quote/MUD.US.md) - [MUU.US](https://longbridge.com/en/quote/MUU.US.md) - [MULL.US](https://longbridge.com/en/quote/MULL.US.md) - [07709.HK](https://longbridge.com/en/quote/07709.HK.md) - [03121.HK](https://longbridge.com/en/quote/03121.HK.md) - [MUYY.US](https://longbridge.com/en/quote/MUYY.US.md) - [MUZ.US](https://longbridge.com/en/quote/MUZ.US.md) - [SSNGY.US](https://longbridge.com/en/quote/SSNGY.US.md) - [MS.US](https://longbridge.com/en/quote/MS.US.md) - [SMSN.UK](https://longbridge.com/en/quote/SMSN.UK.md) - [MS-O.US](https://longbridge.com/en/quote/MS-O.US.md) - [MS-Q.US](https://longbridge.com/en/quote/MS-Q.US.md) - [MS-E.US](https://longbridge.com/en/quote/MS-E.US.md) - [MS-I.US](https://longbridge.com/en/quote/MS-I.US.md) - [MS-L.US](https://longbridge.com/en/quote/MS-L.US.md) - [MS-P.US](https://longbridge.com/en/quote/MS-P.US.md) - [MS-A.US](https://longbridge.com/en/quote/MS-A.US.md) - [MS-F.US](https://longbridge.com/en/quote/MS-F.US.md) - [MS-K.US](https://longbridge.com/en/quote/MS-K.US.md) ## Related News & Research - [SK Hynix Just Sent a Huge Warning to Micron Investors](https://longbridge.com/en/news/291131309.md) - [Why everyone is talking about Micron](https://longbridge.com/en/news/290862553.md) - [Samsung (SSNLF) to Bet $648B on AI in South Korea amid Rivalry with SK Hynix, Micron](https://longbridge.com/en/news/290948299.md) - [Micron CEO Sanjay Mehrotra Says Watching Berkeley’s ‘The Play’ Helped Shape A Leadership Quality He Later Brought To SanDisk](https://longbridge.com/en/news/291039503.md) - [Yelin Lapidot Holdings Management Ltd. 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