One proposal targeted the first phase of SK hynix's upcoming Yongin DRAM fab in South Korea. SK told Reuters that it’s “comprehensively reviewing various approaches and structural alternatives that differ from conventional long-term agreements," but declined to delve into the specifics. The company, now Asia's third most valuable by market cap behind TSMC and Samsung, has seen its share price rise 154% this year.
"Regardless of the type of offer, available capacity is essentially zero right now," said another source to Reuters . "There isn't even a small portion that can be designated for a specific customer."
The proposals are especially striking given the shift in the supply dynamic. As recently as February, Samsung and SK hynix were moving in opposite directions, shortening contract terms and adopting post-settlement pricing mechanisms that allowed them to capture rising spot prices. Customers are now attempting to bypass that pricing power by co-investing in the production infrastructure itself
SK hynix and its rivals, Samsung and Micron, have all acknowledged holding discussions with customers about multi-year supply deals, but those being considered by SK are entirely different. Among the mechanisms under consideration are price-band agreements that would set annual floor and ceiling prices, eliminating the quarterly negotiations that have historically defined memory pricing. Separate discussions have reportedly involved prepayment structures requiring customers to put up 30% to 40% of the contract value in cash upfront.
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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/tech-industry/SPONSORED_LINK_URL
- https://www.tomshardware.com/tech-industry/sk-hynix-customers-offer-to-buy-its-euv-machines-and-fund-new-fab-lines-as-memory-capacity-hits-zero#main
- https://www.tomshardware.com/subscription
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