"Post-settlement pricing," "ultra-short-term contracts"! The "three giants of storage" are signing "unprecedented" supply contracts

Samsung Electronics, SK Hynix, and Micron Technology, among other storage chip giants, have begun to implement an unprecedented contract framework: shifting from traditional long-term fixed-price agreements to short-term or even monthly contracts, and introducing a "price retrospective settlement" mechanism, with market dominance clearly tilting towards suppliers.

According to South Korean tech media etnews, these manufacturers have recently signed new supply contracts with large North American tech clients, allowing for payment adjustments based on market prices after the contract period ends. This change primarily targets clients eager to secure AI infrastructure chip supplies, reflecting that under current demand-driven conditions, ensuring supply has become a higher priority for many clients than controlling prices.

Contract durations have also significantly shortened. Although clients tend to seek stable supply guarantees for up to two years, manufacturers are generally pushing for quarterly or even monthly contracts to maintain maximum flexibility in a market with drastic price fluctuations. Reports indicate that a North American data center operator's request for a two-year supply from a manufacturer was rejected, ultimately securing a commitment from another supplier, but still had to accept post-settlement price terms.

Industry observers quoted by the media suggest that this supplier-led new contract model will continue until the market price increases slow down in the second half of the year.

Post-Settlement Mechanism Breaks Convention, Contract Duration Significantly Shortened

Traditional memory chip supply contracts typically adopt a fixed-price model, where even amid market fluctuations, annual price adjustments generally do not exceed 10%. For example, if the DRAM contract price is set at 100 yuan, it usually remains stable throughout the year, with only minor adjustments during quarterly negotiations, typically fluctuating between 90 yuan and 110 yuan.

The new contract model has shifted to a price retrospective compensation mechanism. Assuming a one-year DRAM supply contract is signed at a price of 100 yuan, if the market price rises by 100% at expiration, the client must pay an additional 100 yuan difference. Currently, Samsung, SK Hynix, and Micron, the three major memory chip manufacturers, have signed such agreements with major North American tech companies.

Although suppliers must bear corresponding losses when market prices fall, industry analysis indicates that current market expectations for price upside risks are significantly higher than for downside possibilities, making the retrospective settlement mechanism more favorable for manufacturers. According to a senior industry insider quoted by the media, for core clients, ensuring stable memory supply is more critical than the specific form of the contract, even if a premium may need to be paid in the future; prioritizing supply assurance remains the primary strategy.

The structural imbalance of supply and demand is driving a significant shortening of memory chip supply contract durations. While clients generally hope to sign long-term agreements of one to two years to support the stable construction of their AI infrastructure, manufacturers are largely resisting long-term commitments due to current supply tightness and increased price volatility. Their core concern is that long-term fixed contracts may limit their opportunities to serve other high-value clients under more favorable conditions during supply shortages.

This game has given rise to ultra-short-term contract models of quarterly or even monthly durations. In the current seller-dominated market, even if clients secure supply guarantees, they must make concessions on contract flexibility