Alibaba, Tencent, and ByteDance have requested that SK hynix and Samsung Electronics extend their long-term memory supply contracts from the current five-year maximum to ten years. These Chinese cloud providers aim to secure consistent access to server DDR and LPDDR memory to support their expanding data center infrastructure, which currently totals 24 GW of computing power.
SK hynix reported that over 50% of its planned production for 2027 and 2028 is already committed to long-term contracts. Similarly, Samsung Electronics has allocated up to 80% of its 2027 production capacity to such agreements and intends to maintain this model for over 70% of its output moving forward. These deals often include large advance payments used by manufacturers to fund production expansion.
While long-term contracts offer manufacturers predictable pricing and production planning, they carry risks due to the historical cyclicality of the memory market. Buyers may face higher costs if spot market prices fall below the levels fixed in these decade-long agreements. The contracts require careful negotiation to account for these long-term uncertainties.
Micron Technology is excluded from these negotiations due to Chinese government restrictions imposed in 2023 on the use of its products in critical national infrastructure. Furthermore, Micron officially ceased the supply of server memory to the Chinese market in 2025.
