When Samsung and SK hynix vow to only sell DRAM via long-term contracts going forward, it naturally prompts uncomfortable questions regarding additional price upside. After all, why would these companies try to lock in today's DRAM prices if substantial upside lies ahead?
The newfound penchant for long-term DRAM supply contracts from Samsung and SK hynix suggests there might not be a lot of price upside left ahead
According to a recent report from South Korea, Samsung and SK hynix have "virtually abandoned the one-year memory short-term supply contract method with global big tech companies and decided to supply products only through the three- to five-year long-term supply contract (LTA) method."
One can generously interpret this initiative as an attempt on the part of Samsung and SK hynix to gain visibility into their medium-term demand profile before expanding their capacity in a sustainable manner.
Yet, there might be a more sinister explanation for these aberrant moves as well. Remember, Samsung and SK hynix are, if nothing else, quite rapacious, some might say venal even. As such, why would these companies try to lock in the prevailing spot DRAM prices if they were internally expecting a lot more price appreciation ahead? This development suggests that peak DRAM prices might be at hand now.
Of course, as we reported recently, Samsung has hiked its DRAM prices by 30 percent quarter-over-quarter for Q2 2026 after raising them by 100 percent year-over-year in Q1 2026. It remains to be seen if the company will implement a material price hike for Q3 as well. If not, this post's thesis will have proven to be quite prescient then.
Of course, while peak DRAM prices might be here already, NAND is an altogether different matter, with UBS now expecting NAND prices to peak only in the third quarter of 2027.
Two disparate factors might be responsible for further NAND-related price appreciation. First, Google's TurboQuant, which had precipitated the ongoing moderation in spot DRAM prices just a few weeks back, only compresses DRAM-based KV cache, leaving the demand profile for NAND unaffected.
Second, major Chinese players such as YMTC are currently moving more of their production towards DRAM, leaving NAND's supply relatively constrained.
Finally, do note that analysts at KB Securities now believe Samsung will earn a total operating profit of 327 trillion won in 2026, and an unfathomable 488 trillion won in 2027, thereby becoming the most profitable company globally, eclipsing NVIDIA's expected operating profit by a material, even if by a narrow margin. You do not reach such a dramatic apex by being foolish. Therefore, we will be paying a lot more attention to Samsung's DRAM pricing trends for Q3 to validate this thesis.
About the author: Writing is my one incontrovertible passion. Over the past six years, he has authored over 2,200 distinct articles on financial and tech-related topics, spanning nearly 1 million words. And he has been a member of Wcctech mobile team since 2025. As an alumnus of the University of Toronto, Rotman Commerce Program, I bring nuance, in-depth knowledge, and a unique perspective to every topic that I cover. When I'm not writing, I'm traveling the world, exploring hidden confectionaries and restaurants as an aspiring food connoisseur.
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