Micron has signed agreements locking in record-high memory prices with major customers through 2030

The memory crisis, dubbed by many as the RAMpocalypse, has touched nearly every corner of the tech world. Console launches have been delayed, laptop prices have climbed, and PC builders are holding off on new rigs with no clear end in sight. Now, Micron has revealed a new business model that makes it clear that relief is not coming anytime soon.

During its Q3 earnings call, CEO Sanjay Mehrotra disclosed that the company has signed 16 Strategic Customer Agreements, or SCAs, with major customers, including hyperscalers. Most of these agreements run from 2026 to 2030 and cannot be canceled. Each SCA commits a customer to purchase a set volume of memory annually over five years, within a defined price band that has both a floor and a ceiling. The floor price is set to deliver what Micron describes as "a very robust gross margin, well above our peak quarterly margins in any past cycle."

The ceiling protects customers if prices climb even higher. Customers also pay an upfront cash deposit as a fail-safe, with $18 billion in cash and $22 billion in total financial commitments already deposited across all 16 agreements. These deposits are returned quarterly but are decremented if a customer fails to purchase the committed volume.

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Mehrotra said customers are willing to lock into agreements at historically high margins because memory supply shortages will take considerable time to improve. Even as industry supply is expected to grow gradually in 2028, Micron does not have a line of sight into when supply will actually catch up with demand. The SCAs account for only around 40% of Micron's revenue, meaning the company is reserving the majority of its inventory for sale at negotiated market prices.

While new fab capacity is being built, Micron's EVP of Global Operations acknowledged that even when those facilities come online around 2028, the supply-and-demand gap is not expected to close meaningfully.