Samsung plans to extend memory chip contracts to 3-5 years to cope with the global supply shortage

Samsung Electronics is considering significantly extending memory chip supply contract durations to 3 to 5 years to stabilize supply and alleviate market concerns over chip shortages. This move marks a major shift in industry contract models and will have far-reaching impacts on the upstream and downstream supply chains.

Samsung Co-CEO Jun Young-hyun stated at the company’s annual shareholder meeting that the company is exploring extending current quarterly or annual contracts to 3 to 5 years. He noted that demand for AI memory chips is expected to remain strong through 2026, and long-term contracts will help both supply and demand sides lock in stable expectations.

Following the announcement, Samsung Electronics’ stock price rose by as much as 7.5% in a single day on the Korea Exchange, marking the third consecutive day of gains, and driving up several other group stocks—Samsung C&T rose as much as 8.9%, and Samsung Life Insurance increased by up to 13%.

Meanwhile, SK Group Chairman Chey Tae-won stated this week that the global memory chip shortage is expected to continue for another four to five years, primarily due to long-term structural constraints in semiconductor capacity expansion. SK Hynix is also preparing specific measures to stabilize chip prices.

Contract Model Shift: Stabilizing Supply on the Agenda

The contract extension plan discussed by Samsung represents a significant breakthrough from current industry practices. Currently, memory chip manufacturers generally settle with customers through quarterly or annual contracts, leading to frequent price negotiations and significant price fluctuations.

If Samsung extends contract durations to 3 to 5 years, it means downstream customers—including server manufacturers, PC and smartphone makers, and automakers—will be able to more stably lock in supply volumes and prices, effectively hedging against shortages. For Samsung, long-term contracts also help improve capacity planning predictability and reduce operational uncertainties.

Jun Young-hyun did not disclose specific implementation timelines or existing customer intentions at the shareholder meeting but clearly characterized this move as a proactive response to the sustained surge in AI chip demand.

AI Production Shift Triggers Routine Memory Shortages

Reports indicate that the tight global memory chip supply is closely related to major manufacturers shifting large-scale production toward AI chips. Samsung, SK Hynix, and Micron dominate the global memory chip supply landscape. In recent years, all three have shifted capacity toward high-bandwidth memory (HBM) to meet the strong demand from NVIDIA AI accelerators, resulting in a noticeable gap in traditional storage chip output.

This gap has begun to impact multiple parts of the industry chain—pressuring corporate profits, hindering expansion plans, and causing procurement costs for laptops, smartphones, automobiles, and data centers to continue rising. Market expectations are that shortages will worsen before improving.

Chey Tae-won pointed out that the core reason for the shortage is the long-term systemic constraints in semiconductor manufacturing capacity expansion, making it difficult to resolve the shortage in the short term.

SK Hynix Also Preparing Price Stabilization Measures

Samsung is not the only major memory player taking action. Chey Tae-won stated this week that SK Hynix is actively preparing specific plans to stabilize memory chip prices, though details have not yet been disclosed.

Analysts believe that simultaneous signals from leading manufacturers to stabilize supply and prices will help restore market sentiment and provide clearer procurement expectations for customers. The strong market reaction to Samsung’s stock price confirms that investors view long-term contract mechanisms as a positive signal for Samsung’s ability to ensure predictable revenue during demand supercycles.

As global AI infrastructure development accelerates, the structural evolution of memory chip supply and demand will continue to be a core narrative in semiconductor investment.

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