Memory manufacturers are increasingly locking in output through three- to five-year supply agreements with a small group of large customers, a shift that could raise the floor on prices paid by consumers for PCs, SSDs, and game consoles.
The report says the industry’s traditional cycle has long been straightforward: shortages push prices up, manufacturers expand capacity, oversupply follows, and prices then collapse. For consumers, that downturn was often the only cheap buying window. Long-term agreements are changing that structure by reserving a large share of production before it reaches the open market.
A 32GB DDR5 memory kit averaged $122.50 in September 2025 and has now climbed to $567.50, up 363%. A 64GB DDR5-6000 kit has risen from about $240 to roughly $1,300 to $1,400.
Up to 70% of output is being reserved
These long-term agreements, or LTAs, are supply contracts that run for three to five years and reserve production in advance for major buyers. Over the past year, leading manufacturers have moved in the same direction, allocating 50% to 70% of output to their top five to 16 customers.
Samsung said on an earnings call that it had finalized agreements with the world’s top five data center customers, with another five large customers in final negotiations. The company plans to allocate about 60% to 70% of total output to long-term contracts.
SanDisk investor materials show that, by capacity, about 50% of output in 2027 and about 67% in 2028 will be assigned to long-term agreements. Its data center business posted 1,298% year-over-year revenue growth, while consumer revenue fell 5%.
Western Digital’s chief executive said one major customer had already secured a long-term agreement running through 2029, and the company is now discussing contracts covering 2029 to 2031.
Micron said on its FY26 Q3 earnings call that it had signed 16 Strategic Customer Agreements, or SCAs, most of them take-or-pay contracts. Under those terms, customers must pay for agreed volumes whether they ultimately use them or not. Fourteen of those agreements represent about $100 billion in minimum revenue over their contract terms, with expected prepayments and related commitments totaling $22 billion.
Micron’s presentation also said that, once completed, “more than half of the company’s revenue is expected to fall under these SCAs signed with customers across end markets.”
Cloud spending is absorbing the supply
The likely buyers are visible in capital spending data. TrendForce estimates that capital expenditure by nine major cloud providers will rise from $922 billion in 2026 to $1.383 trillion in 2027, with DRAM and NAND combined increasing from 47% to 68% of that total.
Cloud companies are also using the memory shortage as part of their sales pitch. Amazon chief executive Andy Jassy said on the company’s first-quarter 2026 earnings call that changes in memory pricing and supply were “further driving enterprises with on-premises infrastructure to the cloud” because Amazon had “much more supply than others.” The effect is circular: smaller companies that cannot afford memory hardware rent cloud services instead, cloud revenue rises, capital spending increases, and more memory gets pulled into data centers.
In the latest quarter, Google Cloud revenue rose 82% year over year, while AWS grew 36.7%. Amazon said that was its fastest growth in 18 quarters.
Price increases have reached end products
The price surge has already moved into consumer hardware. Apple chief executive Tim Cook, in his final earnings call before stepping down, described the current market as a “once-in-a-century flood” for memory.
Xbox raised console prices by $100 to $150 starting Aug. 1. In its announcement, the company said storage and memory prices for consoles had already risen by more than 2.5 times and were expected to double again before the fall of 2027.
Can the cycle really be broken?
Not everyone believes so. The Korea Herald quoted an industry analyst as saying, “Long-term contracts are unlikely to eliminate the memory cycle, but they may reduce earnings volatility by locking in demand for longer periods. Whether they work will depend on whether these contracts hold up in the next downturn.”
TrendForce expects NAND to move into oversupply in 2027, while the DRAM shortage widens, creating a split between the two cycles.
Nelson Duann, vice president at Silicon Motion, told Tom’s Hardware during Computex that the retail SSD market had “almost disappeared,” and that shortages next year would only get worse because additional output from next-generation NAND would still lag demand growth.
Acer chairman Jason Chen took the opposite view on Sept. 19, saying there was no way shortages could continue indefinitely because Chinese capacity was coming online and there was already no shortage problem at all. Investor Michael Burry added to his short position in Micron on Sept. 22 based on that view.
China is gaining ground as U.S. pressure builds
Chinese suppliers are expanding. Counterpoint data shows CXMT’s DRAM revenue share rose from 4% in the second quarter of 2025 to 10% in the second quarter of 2026. YMTC has also pushed its NAND shipment volume into the global top three.
At the same time, U.S. political pressure is building. Senator Chuck Schumer wrote to Apple urging it not to use memory from Chinese state-backed suppliers, and Commerce Secretary Howard Lutnick also said he opposed U.S. companies using those products.
The problem is that the U.S. cannot quickly replace the missing supply. Micron’s chief executive said in late 2023 that domestic U.S. DRAM production accounted for only 2% of global output. NIST estimates that new fabs will not lift that share to about 10% until 2035.
A higher floor for retail prices
The report argues that long-term contracts are effectively putting a floor under prices. If as much as 70% of output is sold in advance, then even when the next oversupply phase arrives, only the unlocked portion of production is left to absorb the full price decline. Consumers end up facing a higher baseline.
That also means the cost of AI data centers is being spread through more expensive components to anyone buying SSDs, game consoles, or laptops.
Two variables stand out. One is contract durability: if customers keep taking delivery during the next downturn, long-term agreements may prove durable; if not, they may turn out to be little more than paper commitments. The other is the interaction between rising Chinese supply and U.S. political restrictions, which may show up first in the retail market that lacks long-term contract protection.
Micron is scheduled to report FY26 Q4 results after the U.S. market closes on Sept. 30, with revenue guidance of about $50 billion. The share of revenue tied to long-term agreements and the size of prepayments will be key figures to watch.