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.
That doesn’t mean they all have $20B in cash to spare, OR the expertise to pull it off. Even China is still playing catch-up and nobody else is even trying because to get started in 2026 would mean poaching a bunch of people with nasty non-compete clauses to even get started planning.
There are documented cases of these same 3 companies colluding to constrain supply, even openly discussing what the target price of DRAM should be. Some of the people who were found guilty got their fines or even prison time and then came back and got promoted.
Apple has $68B in cash on hand. Not stocks or other investments, cash.
Yes, but that doesn’t change that there are dozens of companies that could make ram but don’t because they pass off the price increases and blame ram manufacturers while not risking their own money.