Samsung and SK hynix LTAs: How AI Changed Their Memory Business for the Long Term

Samsung and SK hynix have spent years dealing with sharp ups and downs in the memory market, where strong demand often gave way to sudden slowdowns that hurt revenue and profits. The AI boom has changed that situation because demand for advanced DRAM, HBM, and enterprise SSDs continues to grow, allowing both companies to secure long term agreements that give them more stability than ever before.

For years, both companies depended on short term orders that changed quickly as customers adjusted their purchasing plans. That business model left memory makers exposed to price swings and demand changes, which sometimes resulted in excess inventory and financial losses when customers reduced or delayed orders.

Now, Samsung and SK hynix have shifted to multi year contracts with AI customers that help protect their businesses from future market downturns. These long term agreements also include advance payments in many cases, allowing memory manufacturers to recover production costs even if economic conditions weaken later.

Samsung has also secured agreements that reportedly last for at least five years, while customers still receive an opportunity to renegotiate terms every 12 months. This arrangement gives buyers some flexibility without removing the long term stability that suppliers now depend on.

The agreements are no longer limited to traditional DRAM products because they also cover high bandwidth memory and enterprise SSDs, both of which have become critical for AI servers and data centers. As AI infrastructure expands around the world, demand for these products continues to support Samsung and SK hynix.

Competition also works in favor of the two Korean companies because customers have very few alternatives. Micron remains a major supplier, while China’s CXMT has entered the market, although reports suggest its DDR5 memory currently costs more than Samsung’s products. That limits the number of competitive options available for large customers.

Industry expectations also suggest that memory shortages will continue until 2028, giving Samsung and SK hynix time to strengthen their contract strategy even further. Their shift from unpredictable short term sales to long term agreements has transformed their business model and reduced the risks that once defined the memory industry.