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Memory-maker Micron has found a way to keep prices for its products sky-high for another five years, by signing 16 “strategic customer agreements” (SCAs) that include a floor price the company says comes with “a very robust gross margin for Micron, well above our peak quarterly margins in any past cycle.”
Micron CEO, president and chairman Sanjay Mehrotra explained the SCAs in prepared remarks delivered during the company’s Q3 earnings call. He explained that Micron has signed 16 SCAs, most of them covering 2026 to 2030, and that they involve a commitment to buy a certain quantity of product and pay for it in a pricing band that has a floor and a ceiling price. The floor price covers the historically high gross margins mentioned above, and the ceiling price means those who commit to an SCA are insulated if memory prices go even higher.
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“strategic customer agreements”
Quick question: what consumer is agreeing to this?
I haven’t seen the customers named, but Apple finally increasing prices makes me think they’re one of them.
I’m not buying shit unless I have to. And then I’ll likely buy used.
Software developers: more Electron and bloated frameworks are what the people want! Running 10 independent browser instances for simple chat apps is a great idea!
The same Micron that plead guilty to price fixing of memory 20 years ago.
https://www.theregister.com/off-prem/2004/02/27/memory-makers-hit-by-price-fixing-claims/1070959
Hopefully Chinese firms recognize the gap in the market and increase their capacity.
Yes, I want some slave labor RAM.
The fact you think high tech silicon manufacturing, so complex to do that only few companies around the world can do it, is a high slave labor sector tell you everything you need to know about your thinking process.
It’s “peasant with a dirty pitchfork”-work, really.
Backyard chip foundries, just like Mao wanted
Maybe it’s time to open up a hipster bespoke ram shop. You may only get 1kb but it will be the most beautiful hand-woven core memory you’ve ever seen.
They make whatever is most profitable as individual companies.
And China as a government, absolutely loves the idea of everyone’s computer usage going thru giant corporations because the Chinese government owns part of every Chinese company and doesn’t need a backdoor since they have a set of keys.
Like, why would they make something that they don’t want and would sell for less profit margin overseas?
Why build for a bunch of broke consumers when there’s a blank check for anything related to data centers right now?
That demand could disappear tomorrow. Personal computers will just get more expensive so prices will keep going up for when they have to switch back.
Why would you ever hope China would save us from this?
Edit:
It seems like people are confused here:
Reason 1 they want to make data center stuff, is just money:
They make whatever is most profitable as individual companies.
Separate reason #2 to prefer data center stuff as a product, is everything in China goes thru Chinese companies which China controls.
And China as a government, absolutely loves the idea of everyone’s computer usage going thru giant corporations because the Chinese government owns part of every Chinese company and doesn’t need a backdoor since they have a set of keys.
If Chinese consumers have to offload their data processing to large corporations, then since China owns a piece of every corporations, they now see everything people process.
Which is why the next sentence references two reason the Chinese government would want to squash home computing in favor of “cloud computing” thru data centers:
Like, why would they make something that they don’t (reason 2) want and would sell for less profit margin overseas (reason 1)?
Hey I recommend learning about how the different parts of a computer work what supply chain attacks are and are not realistic before potentially misinforming others. Your concerns are unfounded
Ok .ml, because surely there’s no other reason you’d disagree about China…
I’m .ml because it’s the only large instance that doesn’t require an email for sign up, and it’s primarily for tech enthusiasts and professionals.
At risk of sounding like a meme, ad hominem isn’t a great argument. I don’t want any backdoors on any of my devices and, while it’s unavoidable, it isn’t helpful to just make stuff up instead of understanding.
I wonder if anybody has told Micron about what happens when customers sign a contract but then declare bankruptcy shortly after.
Or what happens to the stock price once the temporary surge in demand fades or new companies enter the market and disrupt it.
That’s the point of the agreement. It locks in that demand by contractually requiring the companies agreeing to it to buy a certain amount of product regardless of whether they actually want it.
Personally, I view this as a sign that Micron believes the AI bubble is going to burst within 5 years, so they’re locking people in at bubble prices now.
Isn’t that called price fixing, and is generally illegal?
This is just like selling / buying options in any other industry, e.g farming to buy something at a specified price in the future.
They’ve agreed to buy XYZ product at 123 time at a price between $100 and $200.
If prices plummet, they’ve still agreed to buy it at $100 (similar to selling an options $100 Strike PUT), but if prices skyrocket, they don’t need to pay more than $200 (similar to buying an options $200 Strike CALL)
Anything in between is just the price, so if it’s $150 then its just $150
It’s not exactly the same as using options, but the rough idea.
I’ve never signed a contract to buy something 5 years from now at a certain price.
It’s a real thing.
Remember they are traitors to actual customers when the bubble burtsts.
They should fail, totally, and vanish from the world.
They’re like a movie actor who was in obscurity for decades and is suddenly popular. Is it being a traitor when everyone is offering larger and larger amounts for your time?
If you applied for two jobs, both said they wanted to hire you and started budding higher and higher so you’d work for them, are you a traitor to the customers who ultimately pay your inflated salary?
I don’t blame Micron. I blame the people who invested billions into AI which allowed this to happen.
The big 3 are known for being a price fixing cartel.
Any individual company could make more money by scaling up production. But they don’t because they already know the other 2 won’t.
So in your analogy the actors have all agreed to only work 10 hours a week and it’s nearly impossible to become an actor without having tens of billions to start
and it’s nearly impossible to become an actor without having tens of billions to start
There are over 300 companies with over a $50B market cap. The money is there.
Micron doesn’t expand production not because they don’t want more money but because they think AI is a fad like everyone else.
There are over 300 companies with over a $50B market cap. The money is there.
That doesn’t mean they all have $20B in cash to spare, OR the expertise to pull it off. Even China is still playing catch-up and nobody else is even trying because to get started in 2026 would mean poaching a bunch of people with nasty non-compete clauses to even get started planning.
There are documented cases of these same 3 companies colluding to constrain supply, even openly discussing what the target price of DRAM should be. Some of the people who were found guilty got their fines or even prison time and then came back and got promoted.
That doesn’t mean they all have $20B in cash
Apple has $68B in cash on hand. Not stocks or other investments, cash.
There are documented cases of these same 3 companies colluding to constrain supply,
Yes, but that doesn’t change that there are dozens of companies that could make ram but don’t because they pass off the price increases and blame ram manufacturers while not risking their own money.
Apple has $68B in cash on hand. Not stocks or other investments, cash.
And when they put all of that into their new RAM business, their investors are going to have a bunch of questions.
Yes, but that doesn’t change that there are dozens of companies that could make ram but don’t because they pass off the price increases and blame ram manufacturers while not risking their own money.
Even with tens of billions in cash it’s not that simple. Like I said, you first start off by convincing a bunch of people their non-competes and give up their massive annual bonuses, so that’s going to be an investment that the existing companies don’t have to make. Then you’ll have caught up with RAM manufacturing in about 10 years or so once you’ve ironed out all the details.
China, the biggest economic powerhouse in the world and the epicenter of modern electronics manufacturing, is still not making HBM3 or 4 or whatever nvidia uses now for Rubin at a commercially viable scale at CXMT, they’re only barely making enough DDR5 to get contracts.
That’s after starting the company in 2016 and getting DDR4 manufacturing going in 2020 and getting people from Samsung to steal trade secrets (and come work for them).
Just because you can build a fab for 20 billion doesn’t mean it’s only 20 billion to get started, or a quick 2-3 year endeavor to do so. Publicly traded companies can’t really do this because it’s a bunch of expenses over multiple years without a single cent of revenue for many years. This needs to be properly private cash or government backing.
