Memory-maker Micron has found a way to keep prices for its products sky-high for another five years, by signing 16 “strategic customer agreements” (SCAs) that include a floor price the company says comes with “a very robust gross margin for Micron, well above our peak quarterly margins in any past cycle.”
Micron CEO, president and chairman Sanjay Mehrotra explained the SCAs in prepared remarks delivered during the company’s Q3 earnings call. He explained that Micron has signed 16 SCAs, most of them covering 2026 to 2030, and that they involve a commitment to buy a certain quantity of product and pay for it in a pricing band that has a floor and a ceiling price. The floor price covers the historically high gross margins mentioned above, and the ceiling price means those who commit to an SCA are insulated if memory prices go even higher.
Well, I know who’s gonna take a beating when the bubble pops and the market falls out from under them. What a stupid decision.
“Hey guys, this AI thing is gonna be like this forever. We’ll never lack for insane demand ever again.”
I think the logic for the customers is that either: A) It will work out exactly as predicted and we can afford whatever the hell we want, so it’s worth it to have secured supply
B) Declare bankruptcy, the purchasing obligations no longer matter.