Forget about 2028: Micron has locked in prices and production until 2030. Lenovo: 'this is the new normal'
Forget about 2028: Micron has locked in prices and production until 2030. Lenovo: 'this is the new normal'
If you thought that 2028, the year when a decrease in memory prices was expected, was still far off, unfortunately, there’s bad news. We speak in the past tense because, apparently, the crisis will last even beyond that year, and as you can imagine, the "culprits" are once again the giants of AI.
Micron has announced a new series of strategic agreements with major customers. As reported by The Register, the company has signed 16 long-term supply contracts, for both DRAM and NAND memory, the majority of which will cover the period from 2026 to 2030, aiming to ensure production capacity and greater predictability for both customers and the producer.
The most significant piece of information pertains to the economic value of the initiative. According to Micron, 14 of the 16 agreements ensure a minimum contracted revenue base of $100 billion, calculated based on anticipated volumes and minimum prices. The company has also communicated that customers have already deposited $22 billion to secure their supply.
The structure of the contracts introduces a more rigid model than in the past. Each agreement includes the purchase of predetermined quantities of memory within a price range that includes a minimum and a maximum value. The minimum price guarantees Micron gross margins defined by the company to be higher than the best results achieved in previous market cycles, while the upper limit protects customers in case memory prices rise beyond certain thresholds.
According to CEO Sanjay Mehrotra, the choice of customers arises from the awareness that memory availability will remain limited for several more years. The company does not indicate a specific date for the return to balance between supply and demand and believes that even in 2027, production capacity will not be sufficient, while improvement may only come gradually starting from 2028.
Several industrial factors underline this situation. The increasing complexity of new memory technologies, along with the time required to build and qualify new production facilities, makes it difficult to rapidly increase supply. Even significant investments in new factories will not allow for the simultaneous satisfaction of demand for HBM destined for artificial intelligence systems and demand for DRAM and NAND for PCs, servers, SSDs, smartphones, and embedded systems.
The pressure comes primarily from data centers dedicated to artificial intelligence, which require ever-increasing amounts of high-capacity memory and high-performance storage. This demand subtracts production capacity from other market segments, with effects that can ripple down to laptops, consumer SSDs, workstations, and embedded devices.
The agreements involve four large customers and three mid-tier companies that previously had not made long-term commitments of this kind. Overall, Micron estimates that the contracts already signed represent about 20% of the projected DRAM volumes and 33% of the projected NAND volumes until 2030.
The company also clarifies that the 16 agreements will cover about 40% of Micron's total revenue, while the remaining portion of production will continue to be marketed through normal market dynamics. The advance deposits made by customers will also contribute to financing the expansion of production capacity.
On the production front, there's also positive news. Micron expects that DRAM production will grow in 2026 with an increase between the lower and middle range of 20%, a slightly higher estimate than previous forecasts. However, the company believes that this increase will not be sufficient to close the gap between supply and demand in the short term.
Lenovo has also weighed in on the matter, stating during a presentation reported by ComputerBase that the current market now represents a 'new normal' and that the prices we've been accustomed to between 2024 and 2025 will 'never' return to previous levels. The company clarified that the reference to prices that will 'never' return had a deliberately ironic tone during the presentation. However, the message remains clear: the outlook is for a deeply different market that could solidify from 2030 onward, with values still higher than those recorded in the last two years.
For Lenovo, this situation requires a different approach in system design. The availability of RAM is becoming an increasingly important element in server configurations, while simply maximizing installed capacity may no longer be the best choice for all workloads. In various scenarios, in fact, a platform based on GPU acceleration could offer a more favorable balance between performance and required memory, according to the company.
If Lenovo's forecasts are confirmed, the impact will not only affect memory modules and SSDs. PCs, servers, consoles, smartphones, and all devices that integrate DRAM and NAND could stabilize at price levels much higher than those we are accustomed to.