According to South Korea’s Maeil Business Newspaper, leading Chinese cloud service providers (CSPs), including Alibaba, Tencent and ByteDance, are in discussions with Samsung Electronics and SK Hynix over long-term supply agreements (LTAs) for server memory. Some customers are pushing for contract terms extending to 2035, a 10-year timeframe far longer than the industry standard of three to five years.
The procurement under negotiation covers server-grade DDR memory and low-power LPDDR memory. DDR serves as the primary memory for data read and write operations by server CPUs. While LPDDR has traditionally been deployed in mobile devices, its advantages in power consumption and thermal management have made it increasingly popular for AI server designs. Amid tightening overall memory supply, server manufacturers have shown particularly strong urgency in securing LPDDR allocations.
A 10-year extended agreement is uncommon in the storage sector. Standard long-term supply contracts in the industry typically run for three to five years. Chinese customers’ push to extend terms all the way to 2035 reflects lingering concerns among cloud giants over the mid-to-long-term stability of DRAM supply. Notably, the report states that demand for these 10-year contracts comes only from “some customers” rather than all parties, and it remains uncertain whether Samsung and SK Hynix will accept such terms.
The core driver prompting Chinese cloud providers to pursue ultra-long-term supply deals with South Korea’s two leading storage suppliers lies in the competitive gap still faced by domestic DRAM makers in high-end server products.
Meanwhile, China’s AI data center buildout is expanding rapidly. A September report from Semianalysis shows that China has commissioned more than 24 gigawatts of AI data center capacity, with an additional roughly 20 gigawatts under construction or in planning. Its total capacity ranks second only to the United States at 56 gigawatts. This massive computing infrastructure creates firm demand for general-purpose DRAM, primarily concentrated in DDR and LPDDR products.
Another contributing factor is that major U.S. hyperscalers have already locked in storage capacity through long-term agreements covering up to 2030. Samsung Electronics noted during its Q2 earnings call that it has signed long-term contracts with five global hyperscale data center clients on a rolling 5-year basis. SK Hynix also confirmed agreements with more than a dozen key customers, with contract terms generally set at five years. Against this backdrop, Chinese cloud players are entering the market later, creating clear urgency to secure remaining capacity and lock in supply for the longer term ahead of competitors.
The storage sector responded positively to the news. Besides SK Hynix, storage-related stocks including SanDisk, Micron Technology, Seagate Technology and Western Digital posted gains of varying degrees. The market views this development as another indicator of sustained strong demand for cloud DRAM.
(Reprinted from https://news.eccn.com/）