From SanDisk to ChangXin, long-term memory supply agreements expand to second- and third-tier manufacturers

The global storage chip supply shortage continues to intensify, with long-term supply agreements (LTA) rapidly expanding from the three major manufacturers—Samsung, SK Hynix, and Micron—to SanDisk and China’s ChangXin Memory Technologies. The imbalance between supply and demand is reshaping pricing power and negotiation logic across the entire industry chain.

This week, Wallstreetcn mentioned that Apple, in order to ensure stable product supply, is testing and adopting ChangXin Memory Technologies’ products, accepting their “off-the-shelf chip” supply model.

According to Zhongjing Xinwei citing South Korean media Digital Daily, Apple once tried to negotiate lower DRAM procurement prices with ChangXin Memory Technologies but was rejected. ChangXin Memory Technologies insisted on quoting prices no lower than Samsung Electronics and SK Hynix—sometimes even higher.

The reason is simple: Chinese domestic enterprises such as Huawei and Xiaomi have already locked in ChangXin Memory Technologies’ capacity through long-term contracts, so ChangXin Memory Technologies does not need to concede to Apple’s stringent conditions.

The market expects that the price of older models of iPhone 17 will start to increase this week. In the Japanese market, older models have already seen an 8% to 11% increase, while the MacBook Air has appreciated by as much as 20%.

The traditional standard contract cycle in the memory industry was one year, with buyers holding the initiative—pushing for lower prices during periods of oversupply and locking in quantities during shortages. This structure is now being completely overturned.

According to a Goldman Sachs comparison chart of LTA terms for Samsung, SK Hynix, Micron, and SanDisk, current contracts at various manufacturers generally last five years, with some customers opting for three-year terms; even the shortest contracts are now triple the industry’s previous norm.

Samsung recently emphasized in its earnings call that its LTA uses five years as the basic period and features a rolling annual renewal mechanism, ensuring contracts never expire.

Samsung Co-CEO Kim Yong-hyun previously stated: In view of the supply-demand uncertainty brought by AI investment expansion, we are shifting from traditional short-term agreements to multi-year contracts of three to five years.

SK Hynix CEO Kwon Oh-jung also pointed out that customers’ demand for LTA continues to increase. Specifically:

• SK Hynix has covered its top ten LTA customers and key clients, with most contracts running five years;
• Micron has signed with 16 strategic customers—most with five-year terms and automotive clients with three-year terms;
• SanDisk’s eight LTA customers have a weighted average contract term exceeding four years, with the longest as much as five years.

All four manufacturers are simultaneously extending contract durations, systematically compressing buyers’ flexibility to adjust in response to changes in the supply-demand environment.

Previously, the enforceability of long-term contracts was limited; buyers could reduce purchase volumes, delay deliveries, or even default after signing—with no real penalty.

The greatest structural change this round is the comprehensive implementation of the advance payment mechanism:

• Micron is expected to receive about $22 billion in cash deposits and related financial commitments;
• SanDisk has disclosed more than $11 billion in financial guarantees and $16.5 billion in customer default protection;
• Samsung stated that its contracts contain large advance payments, about a quarter of which has already been received.

For a cloud service provider, to guarantee sufficient HBM and DRAM supply before 2028, several billion US dollars must be deposited in the manufacturer’s accounts upfront.

This money not only locks in supply but also binds the buyer—the cost of default is extremely high. Goldman Sachs described the advance payment mechanism as “the most significant distinguishing feature of this LTA cycle compared to previous cycles.”