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Micron has already contracted more than 35% of its projected revenue through 2030
Micron's multiyear contracts now cover more than 35% of its projected revenue through 2030, up from about 25% a quarter earlier. Buyers outside those deals compete for memory that Micron, Samsung and SK hynix are assigning years ahead.
The Investor · Invest desk
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What happened
- Micron's count of strategic customer agreements, multiyear deals fixing volume and price terms, rose to 26 in its third quarter from 16 a quarter earlier.
- Remaining performance obligations, the minimum volume customers have committed to buy at minimum contract prices, rose to $150 billion from $100 billion.
- About 75% of the revenue Micron expects from its long-term contracts is set by fixed prices or by price floors and ceilings.
- Micron said more than 75% of next year's output is already allocated to customers and that key supply talks have moved on to 2028 volumes.
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Why it matters
- constraint Once Samsung closes its five final-stage deals, buyers outside its contracts will be left competing for 30% to 40% of its planned DRAM and NAND capacity.
- cost A contract ties up the buyer's cash: Micron's customer deposits and other financial commitments now equal about a fifth of the minimum its customers owe.
- exposure Up to 65% of Micron's projected revenue through 2030 is still uncontracted, so much of its post-2028 cleanroom build depends on demand no customer has signed for yet.
Multiply more than 35% by about 75% and roughly 26% of Micron's projected revenue through 2030 already has its price fixed or bounded [1]. The other quarter of contract revenue is repriced periodically at market rates [7].
A floor protects Micron. Seoul Economic Daily, which reported the figures, described the structure as keeping prices from falling below a certain level even if demand drops sharply [15]. A ceiling protects the customer, and some of Micron's contracts carry one [7]. A seller certain of scarcity through 2031 would hold more of its output back for market pricing.
These terms fit three outcomes. If the shortage runs past 2028, signed buyers keep their volumes and their ceilings while unsigned buyers pay market prices for what is left. If supply catches up, the floors bind and signed buyers pay above spot until their deals end; some new agreements and two extended ones run to 2031 [4]. In between, the market-priced quarter of contract revenue leaves signed buyers carrying part of the swing [7].
Part of the supply that could produce the second outcome is Micron's own. The company expects annual capital spending above $50 billion against $27 billion a year earlier, with about $25 billion in the first half of fiscal 2027 [12] and, by subtraction, more than $25 billion in the second [4]. Much of the increase pays for cleanroom space ahead of demand expected after 2028 [13]. Management said long-term contracts "improve visibility into future demand and help us plan long-term investment and supply" [14].
I think the case that the shortage is a long-term problem for data-centre buyers holds on allocation and is weaker on price. Samsung's base contract runs five years, extendable a year at a time by mutual agreement [9]. SK hynix's deals with about 10 companies run about five years and are backed by deposits [11]. SK hynix did not disclose what share of revenue they cover [11]. A data-centre buyer is joining a queue that the three suppliers are filling years ahead.
On price, the counter-case sits in the contracts themselves. The sellers wrote in floors, and a floor matters only when prices fall. The thesis is wrong if signed buyers find themselves paying floor prices above a falling market before 2031.
What to watch
- Micron's next quarterly figures: whether contract coverage of revenue through 2030 keeps rising from more than 35% and whether remaining performance obligations grow past $150 billion.
- Whether Samsung closes its five final-stage deals and reaches its 60% to 70% contracted share of planned DRAM and NAND capacity.
- Any SK hynix disclosure of the revenue share covered by its roughly five-year contracts.