AI Giants Seek Five-Year DRAM Deals With Samsung, SK Hynix as Shortages Worsen

Long-term supply deals sought as shortages intensify

Big Tech moves to lock in memory as competition for data-center infrastructure heats up

Memory shortages are spilling into laptops and smartphones, driving up prices

SK Hynix is moving to sign long-term DRAM supply agreements with global artificial intelligence companies including Microsoft and Google. The shift shows Big Tech seeking to lock in DRAM supplies years in advance despite the chip's sharp price swings.

The push reflects rising concern over a global memory shortage fueled by the boom in AI infrastructure investment. Big Tech is seeking stable access to memory, a core component in data centers. The strain is also spreading to the laptop and smartphone industries, where companies are increasingly raising prices. Samsung Electronics and SK Hynix, the world's two largest DRAM makers, are expanding capital spending to address the supply imbalance.

Microsoft, Google Push Long-Term DRAM Contracts

SK Hynix is in final talks with Microsoft on a long-term supply agreement for DDR5, according to industry officials. The contract would run for five years starting this year, and its value could reach tens of trillions of won.

The companies are discussing terms including a minimum price to protect against a steep drop in DRAM prices during the contract period, people familiar with the matter said. They are also considering an upfront payment of 10% to 30% of the total contract value.

SK Hynix is also in talks with Google on a similar long-term supply deal. The discussions cover not only its flagship high-bandwidth memory, or HBM, but also general-purpose DRAM used in servers.

Microsoft and Google are pursuing similar long-term memory supply arrangements with Samsung Electronics. Micron Technology, the US company ranked third in the global DRAM market after Samsung and SK Hynix, also signed this type of contract last month.

Securing Supply Takes Priority Over Price

A long-term supply agreement sets volume and pricing in advance over an extended period. Companies typically use that structure when prices surge or supply tightens.

Large customers such as Microsoft and Google had not previously signed annual memory supply contracts with chipmakers. Memory chips are highly exposed to market cycles and prone to sharp price swings.

Even so, Big Tech has recently approached Samsung Electronics and SK Hynix with long-term contract proposals as memory shortages have worsened. AI infrastructure investment is expanding worldwide, leaving available memory supply increasingly tight.

Prices are climbing sharply as well. DDR4's fixed contract price rose to $13 at the end of last month from $1.35 in March of last year, according to DRAMeXchange.

With the battle for AI infrastructure leadership expected to drag on, AI companies have shifted to a strategy centered first on securing supply. “Price is not the issue right now,” a senior semiconductor industry executive said. “It is difficult to secure DRAM volumes themselves.”

Laptop and Smartphone Prices Rise Too

The memory shortage triggered by the AI industry is spreading to consumer devices. Samsung Electronics' Mobile eXperience division raised prices for major products including PCs and tablets starting April 7.

The list price of the Galaxy Book6 series rose by 170,000 won to 880,000 won, or about $123 to $638, depending on specifications, just one week after launch. The top-end Galaxy Book6 Ultra rose by as much as 900,000 won, or about $652, to 5.83 million won, or roughly $4,225.

The Galaxy Tab S10 and S11 series rose by 150,000 won, or about $109, while the Galaxy Tab FE increased by 80,000 won, or about $58. Smartphones were not exempt. Prices for the Galaxy S25 Edge and the Galaxy Z Fold7 and Flip7, released last year, were also raised by 90,000 won to 190,000 won, or about $65 to $138, each.

Other companies in South Korea and overseas are facing similar conditions. LG Electronics raised the price of the LG Gram Pro AI 2026, launched earlier this year, by 13% to 3.54 million won, or about $2,565, from 3.14 million won, or about $2,275.

Lenovo raised prices by more than 30%, while Asus increased prices by 15% to 25%. HP and Dell have also formalized broad price increases for the second quarter.

The increases stem from shortages of memory chips including DRAM and NAND flash. As the AI boom pushes memory makers to focus on higher-value products such as HBM, supplies of general-purpose memory have declined.

The price of general-purpose DRAM, including DDR4 8Gb 1Gx8, has risen more than ninefold over the past year, while NAND flash prices have more than doubled. Memory now accounts for 25% to 30% of laptop manufacturing costs, putting it on par with core components such as CPUs and GPUs.

Some manufacturers are responding by lowering memory capacity rather than raising prices. But that has not been enough to fully offset cost pressure, industry officials said.

Samsung, SK Hynix Step Up DRAM Investment

Samsung Electronics and SK Hynix are stepping up DRAM equipment investment this year in response to the tight market. At its Pyeongtaek campus in Gyeonggi Province, Samsung is focusing on expanding output of sixth-generation 10-nanometer-class, or 1c, DRAM used in HBM4.

At its Hwaseong campus, Samsung is speeding up the shift to fifth-generation 10-nanometer-class, or 1b, DRAM, which is used in SoCAMM and general-purpose DRAM modules.

SK Hynix is responding to new HBM demand mainly through M15X, its new production base in Cheongju, North Chungcheong Province. At its Icheon campus in Gyeonggi Province, where the company is headquartered, it is also accelerating the shift to the advanced 1c DRAM process.

The DRAM shortage is poised to drive both companies to record first-quarter results. Samsung Electronics' preliminary first-quarter revenue came to 133 trillion won, or about $96.4 billion, with operating profit of 57.2 trillion won, or about $41.4 billion.

That would put operating profit at more than triple the previous first-quarter record of 14.12 trillion won set in 2022. Brokerage estimates put SK Hynix's first-quarter revenue at 46.6252 trillion won, or about $33.8 billion, and operating profit at 31.5627 trillion won, or about $22.9 billion. That would be 4.2 times the year-earlier operating profit of 7.4405 trillion won.

Samsung Targets 'Dream' 1-Nanometer Process in Foundry Push

Samsung Electronics, buoyed by its memory business, is also preparing new manufacturing technology for its foundry business. The company has set a goal of introducing a 1-nanometer process by 2030.

The 1-nanometer technology is often described as a “dream semiconductor” process because it would arrange computing devices roughly the size of five atoms using a new structure. Samsung set the goal to compete more directly with rival Taiwan Semiconductor Manufacturing Co. for leadership in next-generation semiconductors. It is also developing a broader lineup of improved 2-nanometer processes to win major customers.

Forksheet Structure Aims to Advance Miniaturization

Samsung's foundry division plans to complete research and development on a 1-nanometer process by 2030 and transfer it to mass production, according to industry officials. The technology is viewed as a breakthrough because it would reduce the width of data-processing devices inside a chip to 1 nanometer.

That would cut device width in half from Samsung's current leading-edge 2-nanometer process and significantly raise manufacturing difficulty.

The 1-nanometer process would also introduce a new structure known as a forksheet alongside further miniaturization. Up to the 2-nanometer node, Samsung has used gate-all-around, or GAA, technology. That design improves power efficiency by expanding the current path from three sides to four.

Forksheet technology narrows the space between GAA devices as much as possible by inserting a nonconductive wall between them.

The concept is similar to replacing lawns between houses in a village with large concrete walls. By removing the empty space, more houses can be built on the same land. In semiconductor terms, that means more devices can be placed on the same chip area.

Direct Challenge to Market Leader TSMC

Samsung's foundry division ranks second in the global market. Its market share is about one-tenth that of TSMC, which controls nearly 70%.

TSMC is also pursuing forksheet adoption for its 1-nanometer process after 2030, according to industry officials. Experts say Samsung's decision to set a roadmap for a 1-nanometer process by 2030 shows it is preparing for a more direct technology race with TSMC.

Samsung has stuck to a strategy of narrowing the gap with TSMC in advanced processes since announcing its vision in 2019 to become the world's top system semiconductor company by 2030. It was the first company to adopt a 7-nanometer extreme ultraviolet lithography process in 2019, and in 2022 it became the first to apply GAA devices in a 3-nanometer process.

“It will not be easy for Samsung to overtake TSMC in revenue and production scale, but it is maintaining technological competition,” an industry official said. “Winning a $16.5 billion contract from Tesla last year to supply 2-nanometer AI chips is a representative achievement based on that technology.”

Diversification of 2-Nanometer Processes Accelerates

Samsung's foundry division is also rolling out a broader range of improved versions of its current leading-edge 2-nanometer technology. It is developing SF2T, a customized process for mass production of Tesla's 2-nanometer AI6 chip.

That chip will be produced from 2027 at Samsung's new foundry hub in Taylor, Texas. Samsung is also accelerating development of SF2P, a new 2-nanometer process to be used from this year for a new smartphone application processor from its System LSI division, as well as SF2P+, which is scheduled to begin operation next year.

Yields on the 2-nanometer process have now exceeded 60% at the high end, lifting productivity and fueling hopes for a return to profit this year, a semiconductor industry official said.

Samsung's foundry division also unveiled a roadmap at OFC 2026 in the US last month to begin mass production of silicon photonics from 2028. Silicon photonics uses light, rather than electricity, to transmit data.

That allows much faster speeds than current methods based on copper circuits. Samsung plans to accelerate its pursuit of TSMC with a turnkey strategy combining silicon photonics with HBM, system semiconductor foundry services and packaging.

Hye-ryeong Kang / Chae-yeon Kim, Korea Economic Daily reporters hr.kang@hankyung.com