Big Tech demanding deals that smooth out memory prices, says SK Hynix

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South Korean memory-maker SK Hynix has revealed that it’s struck “around ten” long-term supply deals with key customers, many of them AI players, and hopes the deals smooth out volatile memory prices.

The company revealed the deals today, along with Q2 results that saw quarterly revenue reach ₩79.3 trillion ($54.5 billion), a 257 percent year-over-year increase. Operating profit grew by an even larger number: 557 percent year-over-year to ₩60.5 trillion ($41.6 billion). The memory-maker even achieved the unusual feat of delivering more net income than revenue, thanks to asset sales.

Underlying all that growth was an average 30 percent increase in the average price customers paid for DRAM, a 50 percent rise in the prices paid for NAND memory, along with increased shipments.

But the company predicted slow growth in Q3, with NAND shipments rising by a low single-digit percentage and about ten percent more DRAM to leave SK Hynix’s factories. Some of that memory will be HBM4, which execs said will ship in increased volume and mean average selling prices rise higher still, as will earnings.

Execs pointed to the company’s colossal expenditure on additional manufacturing capacity but said they see no risk of creating oversupply because the AI industry has a voracious appetite for memory and will do for the foreseeable future.

Indeed, company president Song Hyeon-jong said SK Hynix’s relationship with customers “is evolving beyond transactional relations into more strategic long-term partnerships” and said that behavior “serves as the evidence of the sustained demand coming from the AI ecosystem.”

SK Hynix’s big customers are therefore typically doing deals that last up to five years and structuring those arrangements to keep prices steady.

“The objective is to reduce uncertainty arising from short-term market volatility while enhancing long-term business stability for both our customers and SK Hynix,” Song said.

“At the same time, it is equally important to secure effective purchase commitment, given the impact that demand volatility can have on the memory cycle,” he added. “In addition to long-term volume commitments, the agreements include mechanisms such as deposits that can strengthen contract implementation and demand visibility.”

All of which sounds rather like SK Hynix’s big customers are trying to keep memory prices as low as possible, by helping the Korean company to manage its cashflow so it can keep cranking out more chips.

Head of investor relations Park Seong-hwan argued that demand for memory and storage will remain strong for years to come, even if major AI companies find themselves with more datacenter capacity than they need.

Park said hyperscalers leasing their datacenters is a sign of increased utilization rates for existing AI infrastructure. He also brushed aside adoption of more efficient models as a trend that could be bad for memory sales, suggesting better models spur demand for AI services and therefore also for more infrastructure.

“This view is also supported by the medium-to long-term demand outlook we have discussed with our key customers,” Park said. The company also argued that agentic AI will spur demand for more memory, including in servers.

“We are witnessing a structural shift in demand where both AI memory and conventional memory are growing together,” the company wrote in its earnings release.

Investors appear not to have been impressed by those arguments, or SK Hynix’s profits, as the company’s share price has dropped around five percent at the time of writing. ®