Memory suppliers are securing a larger share of future output under multi-year contracts that set minimum revenue, restrict price declines and require substantial customer financial commitments, giving producers more protection against the abrupt price drops that have defined past chip cycles.
Sandisk said on Aug. 5 that it had signed eight long-term supply agreements carrying a combined floor-value minimum revenue of $93.9 billion. The contracts have a weighted average duration of more than four years, equivalent to roughly $20 billion of minimum annual revenue. Sandisk reported annualized revenue of about $42 billion, meaning the agreements cover a substantial portion of its expected business through the end of the decade.
The terms signal a change in bargaining power across the memory sector. Customers seeking reliable supplies of NAND flash, DRAM and high-bandwidth memory are accepting longer commitments as demand from data-center and AI infrastructure projects competes for output. The structure could make it harder for large buyers to wait out price spikes, while giving suppliers more confidence to plan capacity spending.
Multi-year deals replace annual negotiations
A Goldman Sachs research note dated Aug. 4, led by analyst Lee, identified four common changes in agreements at Samsung Electronics, SK hynix, Micron and Sandisk: longer duration, greater volume coverage, pricing bands that protect suppliers, and stricter enforcement terms.
Memory contracts historically tended to run for one year, leaving manufacturers exposed when demand weakened and customers cut orders. Current arrangements increasingly run for around five years.
Samsung has said its agreements use five-year terms with annual rolling renewals. SK hynix said it had covered its 10 largest long-term-agreement customers and other key accounts, with most terms set at five years.
Micron said it has signed 16 strategic customer agreements, most with five-year durations. Its automotive contracts generally run for three years. Sandisk’s longest disclosed agreement lasts five years.
The longer contracts do not eliminate the memory cycle. Demand forecasts can change sharply, and new fabrication capacity can alter supply conditions. They do, though, place a larger portion of production under committed arrangements before spot-market prices move.
Suppliers gain greater control over available output
The percentage of capacity tied up in contracts is also rising from the estimated 20% to 30% range seen from 2023 through 2025.
Samsung said multi-year orders could reach 60% to 70% of planned capacity once negotiations underway are completed. It also reported that more than 90% of advanced HBM capacity had been locked in. HBM, or high-bandwidth memory, is a specialized form of DRAM used alongside advanced processors in AI servers.
SK hynix said it had completed about 10 long-term agreement negotiations, with contracted volume representing about 50% to 60% of output.
Micron’s 16 agreements cover approximately 20% of its DRAM shipments and one-third of NAND shipments, according to the company. Micron has said it aims for long-term agreements to account for more than half of its revenue.
Sandisk reported even faster movement in its contracted volumes. Its signed agreements cover more than 50% of fiscal 2027 shipment volume and about two-thirds of expected fiscal 2028 volume. About three months earlier, fiscal 2028 coverage had stood near one-third, according to Sandisk.
For customers without long-term allocations, the rising coverage levels could leave a smaller pool of supply available for shorter-term purchasing. That pressure would be most acute in product categories where output cannot be expanded quickly.
Price floors limit the impact of a downturn
Pricing terms are becoming less dependent on a fixed price and more dependent on frameworks that limit how far prices can fall while retaining room for gains if market prices rise.
Bank of America Merrill Lynch said in an Aug. 1 channel check that Samsung’s agreements cap quarterly price declines at 5% or less. The bank said contract terms allow price increases of 10% to 20% or more, without citing a stated upper limit.
Micron said its largest agreement contains a price floor and ceiling linked to market prices in the second quarter of 2026. The company said gross margin would remain well above peaks from earlier cycles even if prices reached the floor. Micron placed those previous cycle peaks at slightly above 60%.
TrendForce, citing Korean media, reported that SK hynix had removed the industry-standard price ceiling in its latest contracts. Goldman Sachs said that arrangement gives SK hynix more exposure to upside in standard DRAM prices than competitors whose agreements retain ceilings.
Sandisk uses customer-specific hybrid pricing models that combine fixed and floating elements, the company said. Such structures can give customers some predictability while shielding suppliers from a complete collapse in realized prices.
Deposits make contract exits more expensive
The agreements also involve commitments beyond orders and pricing. Micron expects to receive roughly $22 billion in cash deposits and related financial commitments under its long-term agreements.
Sandisk disclosed financial guarantees above $11 billion and customer default protection totaling $16.5 billion. Samsung has said its contracts include large prepayments and that it had already received about one-quarter of total expected contract prepayments.
These terms raise the financial cost of abandoning contracted supply when prices fall. They also improve suppliers’ visibility over future cash flows, though customers taking on such obligations become more exposed if their own hardware demand slows.
Goldman Sachs linked the stricter terms to low inventory levels. At the end of the second quarter of 2026, Samsung and SK hynix were reported to hold DRAM and NAND inventories equivalent to two to four weeks of supply. Goldman compared that with a normal range of about four to five weeks and more than 10 weeks ahead of prior downturns.
New NAND supply will take time
NAND capacity remains one of the principal limits on how long suppliers can maintain tight allocation conditions. Total NAND capacity was cited at about 2.01 million wafers per month, with additions from existing fabs, installed tools and process upgrades expected to lift that figure to about 2.15 million wafers per month by year-end.
Larger supply additions would depend on new fabs and cleanroom expansions, which were estimated to require 1.5 to two years. The additional capacity linked to those projects, expected after the middle of next year, was estimated at 17% to 19% of total supply.
For cryptocurrency businesses, the immediate exposure varies sharply by activity. Bitcoin mining economics are driven primarily by ASIC efficiency, electricity costs and Bitcoin’s network difficulty rather than NAND storage prices. Mining farms and node operators do use servers, networking equipment and storage, but memory contracts alone are unlikely to determine their operating costs.
Projects building AI-linked decentralized infrastructure, data-storage networks, decentralized physical infrastructure systems, or large validator operations could face more direct hardware procurement pressure. Higher prices for enterprise SSDs, DRAM and server components would raise upfront deployment costs and may favor operators that already have equipment installed or have secured supply arrangements.
The memory industry’s new contracts therefore reshape a practical constraint for hardware-dependent crypto networks: access to servers and storage may increasingly depend on commitments negotiated well before machines are deployed.
Curious how long-term contracts shape real trading? Explore crypto derivatives and pricing dynamics across volatile markets.
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