TrendForce, citing a report from Green Economy News, stated that industry sources revealed South Korean memory chip giant SK Hynix is adopting new contracts that remove the industry-standard price cap. Furthermore, according to estimates from investment research firm Bernstein, SK Hynix’s DRAM gross margin , approaching what is generally considered the peak of the economic cycle.
Micron Technology, another major memory chip manufacturer, recently announced another important strategic customer agreement (SCA) with General Motors. Amid soaring memory prices, how global memory manufacturers sign long-term supply contracts with major customers has become a focus of market attention.
Experts point out that traditional memory chip procurement contracts set price ceilings to limit price fluctuations. However, SK Hynix’s new contract structure differs from the traditional one, allowing the long-term contract price to be adjusted accordingly should supply shortages further drive up spot prices. SK’s change to the long-term contract structure is undoubtedly aimed at better seizing profit opportunities during upward cycles.
Sources say SK Hynix is currently likely the only major memory supplier to remove price caps from long-term contracts. Micron, on the other hand, has adopted a different strategy in its recent long-term contracts with key customers.
It is understood that Micron’s long-term strategic customer procurement contracts signed last month set the price ceiling for products at the highest market price in the second quarter of 2026, while also setting a minimum price for the entire contract period. Customers are also required to commit to binding purchase volumes. However, for next-generation products such as High Bandwidth Memory (HBM), DDR6, and LPDDR6, pricing will be negotiated separately.
Major memory chip manufacturers are now extending the duration of their new long-term procurement contracts. Market rumors suggest that SK Hynix and Samsung have both extended their long-term supply contracts from the traditional one year to three to five years. Micron is also preparing to extend its long-term contracts to five years, while its long-term contracts with automakers are for three years.
According to Micron’s latest financial report, the company’s gross margin is close to 85%; now SK Hynix is reported to have canceled the price cap on long-term contracts, and Bernstein expects its DRAM gross margin to reach 90% in the last quarter.
Semiconductor stock research firms warn that the industry generally estimates the peak range for DRAM gross margins to be between 88% and 92%. Investors should be wary of how long memory manufacturers can maintain such high gross margins. At the same time, they should also pay attention to when competitors such as Changxin Memory Technologies in mainland China will catch up.
