Why Big Tech Is Locking In DRAM Supply?

Microsoft and Google are negotiating multi-year DRAM supply agreements with SK Hynix, introducing price floor guarantees and upfront deposits (10–30%), an unprecedented structure in the memory industry.

The contracts, expected to last around 3 years, mark a shift from traditional short-term purchasing cycles due to historically volatile DRAM pricing.

This model is expanding across the industry, with similar negotiations involving Samsung Electronics, and Micron Technology reportedly already signing comparable agreements.

The shift is driven by AI infrastructure demand, causing severe DRAM and HBM supply shortages, with prices rising sharply (DDR4 up nearly 10x YoY).

Tech companies are changing strategy from price optimization to securing supply, treating DRAM as a strategic resource rather than a commodity.

Memory manufacturers (Samsung and SK Hynix) are expanding production, and are expected to deliver record earnings, supported by tight supply, long-term contracts, and improved cash flow visibility.