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Micron locks in historically high memory prices for five years (www.theregister.com)
submitted 4 months ago by to c/technology@lemmy.world
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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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[–] 2 points 4 months ago (2 children)

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.

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  • [–] 0 points 4 months ago (1 child)

    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.

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  • [–] 2 points 4 months ago

    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.

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