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Under the terms of the agreement, Biwin will purchase $1.86 billion worth of 3D NAND memory from an unknown supplier over a period of 24 months that starts on June 30, 2026. Both bit volume and pricing are fixed, so Biwin will get its memory at the fixed price no matter how high spot or contract prices are at the time. Of course, this represents risks if NAND prices drop in the next two years, though industry observers believe that NAND supply to SSD module makers will worsen in 2027, so Biwin's risks seem to be manageable.
"The total committed purchase amount under the Contract is US$1.8608 billion, and the commitment period is 24 months," Biwin's filing with the Shanghai Stock Exchange reads. "In accordance with the Contract, both quantity and price are fixed. The Company will complete purchases in batches from the third quarter of 2026 through the second quarter of 2028."
Biwin is among the world's biggest branded suppliers of SSDs, though with a 10% market share in 2024, it cannot rival Kingston or NAND makers themselves. The company's willing to spend $1.86 billion could enable it to grow its market share, or just supply SSDs to large customers, such as hyperscalers that demand a stable supply. At the same time, the purchase commitment that represents over 50% of Biwin's annual revenue shows how difficult it is becoming for the company to get its NAND, with some even commenting that the spot market could dry up in the future as companies are forced to sign LTAs instead. The big question is whether other SSD makers without their own NAND memory will follow through.
What strikes the eye in the announcement is that the procurement volume for 2026 accounts for 4.45% of Biwin's total NAND flash purchases in 2025, which indicates that the company is paying a fortune for a relatively low volume of NAND. Meanwhile, the procurement volume for 2027 accounts for 14.88% of the company’s total NAND flash purchases in 2025, which further underlines the increased pricing of NAND.
Crushing shortages have pushed long-term supply agreements for SSDs and HDDs to record five years
Silicon Motion increases sales of SSD controllers amid NAND shortage, but expects NAND shortages to get worse in 2027
Record-high pricing pushes SSD and memory makers to borrow $880 million just to afford buying chips
It should be noted that for $1.86 billion, the company is 'locking in a portion of its baseline demand for the next 24 months,' which means that the amount of NAND memory it gets does not cover all of its needs. Yet, there is good news too: give the large scale of the company and its roadmap, the overall risk of the supply agreement is 'considered manageable.'
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Key considerations
- Investor positioning can change fast
- Volatility remains possible near catalysts
- Macro rates and liquidity can dominate flows
Reference reading
- https://www.tomshardware.com/pc-components/ssds/SPONSORED_LINK_URL
- https://www.tomshardware.com/pc-components/ssds/crushing-shortages-force-biwin-into-usd1-86-billion-nand-deal-for-ssds-multi-year-agreement-locks-in-fixed-pricing-as-spot-market-threatens-to-dry-up#main
- https://www.tomshardware.com/subscription
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