Micron and Sandisk Secure Billions in AI Memory Deals

AI-driven demand for data center memory has pushed memory chip prices sixfold over the last year, leading Micron Technology and Sandisk to shift toward long-term, take-or-pay contracts. Micron secured 16 Strategic Customer Agreements with a minimum value of $100 billion over three to five years, causing its remaining performance obligations to jump from $5 billion in May to $100 billion by June. Sandisk similarly entered five multi-year agreements, three of which provide minimum revenue commitments totaling $42 billion.

While demand is expected to exceed supply beyond 2030, the market remains volatile. Both Micron and Sandisk saw stock price declines in July—down 24% and 38% respectively over the previous month—reflecting investor skepticism over the cyclical nature of the commodity market. Despite this, analysts project substantial revenue growth for fiscal year 2027, estimating 81% for Micron and 154% for Sandisk.

Competition is intensifying as Samsung and SK Hynix execute massive capacity expansions. The South Korean government announced a joint initiative for these firms to build four fabrication plants and a packaging facility costing approximately $575 billion. Reports suggest these competitors may spend a combined $1.3 trillion on facilities over the next decade, which could eventually pressure pricing and limit Micron's negotiating power.