Business · Companies · 3 hrs ago
Chinese Cloud Firms Seek Memory Supply Deals Through 2035
Four major Chinese cloud firms have reportedly asked Samsung and other memory makers for supply deals through 2035 for server memory chips.
The firms are Alibaba, Baidu, Tencent and ByteDance, and the requested products include DDR5 and LPDDR5X memory.
A Korean analyst said Chinese chipmaker CXMT still trails Samsung and SK Hynix in technology and reliable mass production of these chips.
Chinese cloud firms currently account for an estimated 7% to 8% of Samsung’s DRAM sales, leaving room for growth if deals are made.
Samsung is estimated to have already assigned 70% to 80% of next year’s planned memory output through long-term contracts, while US cloud companies compete for the rest.
If contracts grow from about five years to ten, the analyst expects stronger pricing power and more predictable earnings for Samsung.
The analyst also expects expanding AI infrastructure investment to lift memory demand and says longer deals could reduce swings in the memory business.
Alibaba, Baidu, Tencent and ByteDance have reportedly asked Samsung Electronics and other memory makers for supply contracts extending through 2035.
The requested contracts cover server DRAM, including DDR5 and LPDDR5X.
A KB Securities analyst said the Chinese firms may be seeking supplies because domestic maker CXMT still trails Samsung and SK Hynix in technology and production stability for high-performance memory.
Samsung is estimated to have allocated 70% to 80% of next year’s planned memory output through long-term agreements.
KB Securities said competition for supply could strengthen memory prices and improve the industry’s long-term earnings visibility.
- Who
- Alibaba, Baidu, Tencent and ByteDance reportedly asked Samsung Electronics and other major memory makers for long-term supply deals.
- What
- They reportedly sought server DRAM supply contracts through 2035.
- When
- The requests were described as recent; the contracts would extend through 2035.
- Where
- Not stated.
- Why
- A KB Securities analyst said China’s CXMT still trails Samsung and SK Hynix in high-performance DDR and LPDDR technology and production stability.
This story does not have two clearly opposing sides.
Four major Chinese cloud providers reportedly requested long-term server DRAM supply contracts through 2035.
Samsung is estimated to have allocated about 70% to 80% of its planned memory production through long-term agreements.
The requested supply contracts would run for 10 years.
- Chinese cloud firms
- Alibaba, Baidu, Tencent and ByteDance
- Contract end date
- 2035
- Memory types
- DDR5 and LPDDR5X server DRAM
- Samsung output allocation
- About 70% to 80% of next year’s planned memory production
- Estimated Chinese cloud share of Samsung DRAM revenue
- 7% to 8%
1 source
What people are saying
Recently, Alibaba, Baidu, Tencent and ByteDance, the four major Chinese cloud service providers, are reported to have requested 10-year ultra-long-term supply contracts through 2035 for server DRAM such as DDR5 and LPDDR5X from major memory makers, including Samsung Electronics.
Samsung Electronics is estimated to have already allocated about 70% to 80% of its planned memory production for next year through long-term supply agreements.
If long-term supply agreements, which have mainly been around five years, expand to 10-year terms as Chinese cloud companies join the competition to secure long-term volumes, Samsung Electronics’ sales visibility and pricing power will be further strengthened.