▲ HBM4, which Micron has begun mass production and shipment
U.S. memory chipmaker Micron Technology has unveiled the status of its long-term supply agreements, a key focus for Wall Street ahead of its earnings report, while announcing record-high results for the third fiscal quarter.
Sanjay Mehrotra, CEO of Micron, stated during a conference call on the 24th (local time), "We have signed 16 Strategic Customer Agreements (SCAs), which will fundamentally transform our business model."
He added, "Once the contracts currently under negotiation are finalized, more than half of the company's revenue will be generated under these agreements."
According to Micron, the current order backlog under these SCAs amounts to approximately $100 billion (155 trillion KRW).
Of the 16 agreements, seven have been classified as "major contracts," consisting of four large-scale and three medium-scale deals.
While the names of the customers were not disclosed, management explained that most are data center operators that have "secured volume and demand visibility through fixed multi-year contracts."
Unlike traditional annual Long-Term Agreements (LTAs), SCAs involve pre-determining both volume and pricing over a five-year period (three years for the automotive sector).
During the second-quarter earnings call, CEO Mehrotra previously explained, "SCAs are intended to increase business visibility and stability," adding that "customers also gain certainty in establishing their own business plans."
Micron's success with long-term supply agreements is interpreted as a sign that the cyclical "oversupply leading to price collapse" pattern, which has dominated the memory industry for decades, is fundamentally changing in the era of Artificial Intelligence (AI).
Memory manufacturers have historically operated by selling products based on market prices and enduring downturns when supply outpaces demand, but the surge in AI infrastructure investment has begun to alter this structure.
Global investment analysis platform TradingKey analyzed that as high-performance chip manufacturers and hyperscalers recognize memory semiconductors as strategic assets rather than simple components, 3 to 5-year long-term contracts are spreading across the industry.
CEO Mehrotra stated, "Customers recognize that it will take a significant amount of time for the memory and storage supply shortage to improve, and supply will only gradually ease by 2028."
Projections suggest that supply shortages will be difficult to resolve before 2027 to 2028, given that Micron's new fabs in Idaho and New York are scheduled for mid-2027 and 2028–2030, respectively, while SK Hynix's M15X line and Samsung's P5 line are also slated for similar timelines.
This supply-demand structure served as the basis for the significant upward revision of the fourth-quarter guidance.
Micron projected fourth-quarter revenue at $50 billion, far exceeding market expectations of $43.58 billion, and forecasted an operating profit margin of 86%, higher than that of the third quarter (81.2%).
Samsung Electronics and SK Hynix are following the same trend.
According to TrendForce, both companies are also reportedly accelerating their transition to 3 to 5-year long-term supply agreements with major global big tech firms.
Analysts suggest that in a structure where supply constraints persist for the long term, SCAs act as a safety net that locks in pricing power.
(Photo: Provided by Micron, Yonhap News)
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