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

Samsung Electronics, SK Hynix, and Micron Technology—the major memory chip giants—have begun implementing an unprecedented contract framework: **shifting from traditional long-term fixed price agreements to short-term, even monthly contracts, and introducing a "price retrospective settlement" mechanism.** Market leverage has clearly tilted in favor of suppliers. According to South Korean tech media etnews, the new supply contracts recently signed by these manufacturers and large North American tech clients **now allow for payment adjustments after the contract period based on prevailing market prices.** This shift mainly targets customers urgently seeking to secure AI infrastructure chip supplies, reflecting that in the current demand-driven environment, **ensuring supply has become a higher priority for many clients than controlling prices.** Contract terms have also been significantly shortened. While clients prefer stable supply commitments lasting up to two years, **manufacturers are widely adopting quarterly or even monthly contracts to maintain maximum flexibility in the face of volatile pricing.** Reports indicate that a North American data center operator's two-year supply request was rejected by one manufacturer, who ultimately secured a promise from another supplier—**but still had to accept the price retrospective settlement clause.** Industry observers quoted by the media say this supplier-dominated new contract model will persist until the upward momentum of market prices eases in the second half of the year. ## Retrospective Settlement Mechanism Breaks Convention, Contract Duration Sharply Reduced **Traditional memory chip supply contracts typically use fixed price models,** with annual price adjustments usually not exceeding 10% even amid market fluctuations. For example, if the contract price for DRAM is set at 100 yuan, it generally remains stable over the year, with only minor tweaks during quarterly negotiations, normally ranging between 90 and 110 yuan. **The new contract model has shifted to a price retrospective compensation mechanism.** Suppose a one-year DRAM supply contract is signed at 100 yuan; if the market price rises by 100% at the end of the term, the customer must pay an additional 100 yuan. Currently, Samsung, SK Hynix, and Micron—the three major memory chip manufacturers—have all signed such agreements with major North American tech firms. **Although suppliers bear corresponding losses when market prices fall, industry analysis notes that currently, the risk of price increases far outweighs downside potential,** making the retrospective settlement mechanism more beneficial to manufacturers. A seasoned industry insider quoted by the media said that for core customers, stable memory supply is more crucial than the specific contract form; even if they may need to pay a premium in the future, securing supply remains the top strategic priority. **Structural supply-demand imbalances are driving a significant reduction in the duration of memory chip supply contracts.** While clients generally seek one- to two-year long-term agreements to support stable AI infrastructure development, manufacturers are collectively resisting long-term commitments due to tight supply and intensified price volatility. Their main concern is that long-term fixed contracts could limit their flexibility to serve other high-value customers on more favorable terms during supply shortages. This dynamic has spawned ultra-short contracts, spanning quarters or even months. In the current seller-driven market, even if clients secure supply guarantees, they must be flexible with contract terms. Risk Disclosure and Disclaimer The market involves risk; investments should be made cautiously. This article does not constitute personal investment advice, nor does it account for the specific investment objectives, financial situation, or needs of any individual user. Users should assess whether any opinions, views, or conclusions in this article suit their personal circumstances. Investment decisions based on this information are made at your own risk.