Samsung Electronics disclosed in its earnings call that it plans to shift up to 70% of its memory production to five-year, rolling long-term agreements (LTAs) — a strategic pivot away from spot-market-centered sales toward long-term contracts. The company said it has already signed agreements with five major customers and is in negotiations with five more. Citing surging demand for HBM4 driven by AI data centers, Samsung warned that the memory supply shortage will get worse in 2027 and is unlikely to improve even by 2028.
What This Article Covers
- The details of Samsung’s plan to shift 70% of memory output to long-term contracts
- What Samsung’s warning about the memory shortage through 2027-2028 says
- How central HBM4 demand and the memory business are to Samsung’s earnings
Overview
As AI data center investment continues to grow, demand for memory semiconductors — HBM (high-bandwidth memory) in particular — continues to outstrip supply. In its earnings call, Samsung signaled that it views this tightness not as a temporary spike but as a structural supply shortage, and appears to be shifting its customer relationships from spot transactions to long-term contracts to secure supply stability and improve pricing visibility.
Details
The following points were reported by German tech outlet ComputerBase, based on Samsung’s own earnings disclosures as the primary source.
- Samsung plans to shift up to 70% of memory production to five-year LTAs; it has already signed five major customers and is negotiating with five more
- Samsung warned that “2027 will get even worse, and 2028 is unlikely to bring improvement.” Additional production capacity is scheduled to come online gradually from 2028, and the company declined to offer a forecast beyond 2029
- Q3 HBM4 revenue is expected to more than triple quarter-over-quarter, with Samsung targeting a DRAM-comparable market share in the second half of 2026
- More than 60% of NAND revenue already comes from server SSDs
- The memory division accounts for nearly all of Samsung’s operating profit — without it, the company would be close to unprofitable overall
Industry Impact
Samsung’s shift from spot-market sales to long-term contracts signals that the company views AI-driven memory demand tightness as a structural phenomenon likely to persist at least through 2028, not a temporary surge. If the long-term-contract ratio reaches 70%, AI chipmakers and server makers would gain more predictable memory procurement, but spot-market prices could remain elevated as a result.
Relevance to Japan
Samsung’s supply strategy shift is relevant to companies in Japan building AI servers and data centers, as it affects both procurement cost and lead-time visibility for memory. A prolonged memory shortage could also ripple through to competing memory makers like SK hynix and Micron, and to order trends for Japan’s semiconductor equipment and materials suppliers.
What to Watch Next
- Progress on the five customers reportedly still in negotiation, and the identities of contracted customers
- Details of the additional production capacity slated to come online from 2028 and its effect on the shortage
- The gap between LTA pricing and spot pricing, and whether other memory makers follow Samsung’s lead
Summary
Samsung Electronics is shifting up to 70% of its memory production to five-year long-term agreements and warned that the AI-driven HBM4 demand surge will worsen the memory shortage through 2027, with little improvement expected even in 2028. With the memory business underpinning nearly all of Samsung’s profit, this supply strategy shift could shape procurement conditions across the AI semiconductor supply chain — worth tracking as contract details and capacity plans emerge.
