Microsoft, Google Sign Multi-Year DRAM Deals with SK Hynix for AI Supply

Microsoft and Google have formalized multi-year Long-Term Supply Agreements (LTAs) with memory manufacturer SK Hynix, with the contracts set to commence in the 2026 timeframe and span three years. This strategic procurement is explicitly designed to guarantee the necessary DRAM supply for the rapidly expanding artificial intelligence infrastructure maintained by the two technology titans. Industry sources confirmed these developments as of April 6, 2026, highlighting a fundamental recalibration in how critical semiconductor components are acquired by hyperscalers.

The agreements deviate from historical market norms by embedding non-traditional financial stipulations to secure supply chains against future volatility. These contracts incorporate two key provisions that alter the risk-reward dynamic for SK Hynix. First, the agreements mandate a prepayment scheme, requiring Microsoft and Google to furnish between 10% and 30% of the total contract value upfront, providing SK Hynix with immediate capital and revenue certainty. Second, a minimum price guarantee is included to shield the supplier from potential sharp declines in DRAM unit costs over the contract duration. SK Hynix is reportedly finalizing a specific three-year DDR5 server-grade memory agreement with Microsoft, underscoring the immediate focus on high-performance components.

The urgency driving these long-term commitments stems from a structural supply crunch affecting both High Bandwidth Memory (HBM) and conventional server DRAM, as production capacity is overwhelmingly channeled toward AI-optimized components. This intense focus has transformed memory chips from fungible commodities into strategic reserve resources, a trend echoed by Micron Technology, which has also signed similar multi-year agreements. Furthermore, reports indicate that both Google and Microsoft are concurrently engaged in similar long-term negotiations with Samsung Electronics, suggesting a broader industry-wide shift in procurement strategy.

SK Hynix's financial performance in Fiscal Year 2025 serves as a testament to this market dynamic, as the company achieved record revenues of 97.1467 trillion won and a record operating profit of 47.2063 trillion won. This operating profit figure surpassed that of Samsung Electronics for the first time, with SK Hynix's operating margin reaching 49 percent for the full year, and an exceptional 58 percent in the fourth quarter alone. This financial outperformance is directly attributed to its early and focused commitment to the high-value HBM segment, which became the primary driver of margin expansion.

The market context reveals the severity of the supply imbalance. Conventional DDR4 memory prices have experienced extreme inflation, with reports indicating that DDR4 prices soared nearly tenfold within a single year, while Q2 2026 contract prices for conventional DRAM were forecast to rise by 58% to 63% quarter-over-quarter. The soaring cost of older memory standards, such as DDR4 16Gb modules which surged 18 times in price since the end of 2024, illustrates the resource allocation imbalance caused by the AI boom prioritizing advanced components. This strategic pivot away from transactional, short-term purchasing toward binding, multi-year commitments is reshaping the semiconductor landscape, where memory is now valued based on supply-chain certainty rather than just cyclical pricing.