AINEWS
The same day Samsung Q2 results included something the prior earnings analysis missed — a contract structure that locks 60 70% of 2027 2028 memory capacity at floor prices, years in advance. Here is how it works.
The same Samsung earnings call that produced a 19-fold profit surge also contained a concrete market-structure detail the prior same-day analysis did not capture: the world's largest memory chipmaker has already locked most of its 2027 and 2028 output into multi-year contracts with floor pricing and upfront cash.
Samsung's second-quarter 2026 results, published on 30 July, showed all-time quarterly records — consolidated revenue of KRW 171.5 trillion (~$118 billion) and operating profit of KRW 89.5 trillion (~$61.9 billion) — on the strength of a memory market its own CFO has described as a multi-year supply constraint. The prior analysis of the same results covered the buyer-side P&L symmetry: the MX and Networks division's first quarterly operating loss, driven by component costs Samsung itself was charging itself. This piece covers the mechanism underneath that result.
Long-term supply agreements, or LTSAs, lock customers into at least five years of volume at pre-agreed floor prices, with cash up front. On the same analyst call, EVP Jaejune Kim of the Memory Business told investors that 60 to 70 percent of Samsung's 2027 and 2028 memory output is already spoken for under these deals, according to a Reuters-syndicated transcript carried by Business Standard. Five more agreements with data-centre firms are close to being signed. That converts a supply forecast into an allocation: the counterparties — Samsung names them as the top five global data-centre firms — get first call on HBM, the stacked memory that rides next to AI accelerators, and on conventional DRAM and NAND. Everyone else competes for whatever Samsung chooses to leave in the spot market, which the company is now publicly sizing at 30 to 40 percent of its forward capacity.
DRAM is the working memory inside phones, PCs, and servers; NAND is the storage in the same devices, plus the SSDs that ship in laptops and data centres. The past quarter is settled. The forecast is the news. On the analyst call, Kim said the 2027 supply shortage will deepen versus 2026 and "continue in 2028," even as demand for memory in phones and PCs moderates, because the data-centre side keeps pulling supply forward. Capacity is not expected to catch up within Samsung's planning horizon, which the company has now extended through 2028, and The Register's coverage frames the warning as a three-year buyer problem rather than a single cycle.
SK Hynix, Samsung's memory rival, has separately flagged a roughly 50 percent capex increase to meet AI demand, which keeps a floor under contract pricing rather than chasing it down. The two suppliers are both describing the same structural constraint from opposite sides of the negotiation table.
HBM, the stacked memory that rides next to AI accelerators, is where the contract is most binding. Samsung has begun shipping HBM4, its fourth-generation high-bandwidth memory, at scale and is sampling the next step, HBM4E, to Nvidia and AMD. The company told investors to expect HBM4 revenue to more than triple in Q3 2026, and to bring HBM's share of its DRAM business into line with its overall DRAM share by the second half of this year. Foundry, the contract-manufacturing business inside Device Solutions, is targeting double-digit revenue growth in H2 as the second-generation 2-nanometre mobile chip and a 4-nanometre LPU and base die ramp. The Taylor, Texas fab is on track to start production this year, with a second fab targeted to break ground and reach mass production in 2030.
Server builders and cloud buyers not yet on the LTSA list now have to plan years ahead, not quarters, because the residual 30 to 40 percent of capacity is the only market left to compete in. Phone makers face a contract that locks component costs. Home upgraders timing a DRAM or SSD purchase are looking at a market where the LTSA floor is the reason retail prices do not fall back to the old cycle. Two things would break the floor: a major new-entrant ramp — SK Hynix's capex lift, a Micron push, or new Chinese capacity — or a sharp AI-demand correction. Samsung's CFO, Park Soon-cheol, told the call the company has no plans to issue ADRs or raise fresh funds. The cash is already coming in.
HBM4E volume, more than HBM4, is the next signal. Samples are already with Nvidia and AMD; the contract terms for that generation will tell buyers how much of the 2028 allocation is already spoken for before the year is out.