Major tech companies have come to propose direct investments in SK Hynix’s new production lines, SK Hynix, spingendosi persino a offrire? to cover the payment for purchasing advanced machinery.
This is a move that has no precedent in the memory market, driven by a supply shortage that is forcing major buyers to seek extreme solutions.
Until recently, memory production DRAM and NAND was carried out on a speculative basis to then be released into the open market, unlike what happens usually for logic processors, where the creation of capacity dedicated and financed by customers is a well-established practice.
Current proposals far surpass traditional long-term agreements. Some customers have indeed suggested financing exclusive facilities within the South Korean company’s facilities, while others have said they were willing to cover the full costs of EUV lithography machines produced by ASML.
These systems, essential for tracing circuits on silicon wafers, carry a unit cost amounting to hundreds of millions of dollars. Among the options on the table is also direct financing for the first phase of the future DRAM memory factory located in Yongin, South Korea.
Memory shortage: the reversal of commercial dynamics
This situation highlights a clear transformation of the balance of power. Only last February, the strategies of SK Hynix and the competing Samsung were moving in the opposite direction, aiming for shorter contracts to exploit price increases on the spot market.
Today, instead, buyers are looking to circumvent this commercial leverage by investing directly in productive infrastructure. The South Korean company has confirmed that it is carefully evaluating these structural alternatives, while maintaining some caution about operational details.
The financial moment is particularly favorable for SK Hynix, which has seen its share price rise by 154% since the start of the year, becoming the third Asian company by market capitalization, surpassed only by TSMC and Samsung.
In addition to direct investments, the parties are discussing new contractual models. They are talking about price-band-based agreements with annual minimum and maximum thresholds, a solution that would eliminate the exhausting quarterly negotiations.
Other negotiations underway concern the possibility of structuring upfront payments, requiring customers to pay between 30% and 40%% of the total contract value before starting the supply.
The market is not stable
Despite the enormous influx of capital proposed, producers move with extreme caution. Accepting such conditions could bind companies to single buyers, limiting their freedom of action.
At present, available production capacity is virtually exhausted, to the point that there is not even a minimal share of production that could be assigned to a new specific customer.
Suppliers want to avoid showing favoritism during this phase of massive AI-driven expansion, to not risk betting on the wrong subject in a highly competitive market.
Samsung itself has stated that the recent long-term agreements signed are strictly binding. The forecasts for the coming years do not indicate any rapid return to normality. Chey Tae-won, chairman of the SK group, recently stated that memory shortages will continue to be felt until 2030.
In the same vein of caution, both SK Hynix and Samsung have warned investors that supply constraints and the resulting production bottlenecks will remain a constant at least until 2027.
