Samsung Secures Multi-Year Data Center Memory Contracts as AI Shortages Threaten Supply Through 2028
Tech giant secures capacity agreements with major cloud operators as executive warns chip shortages will persist through 2028.
In a fundamental departure from traditional memory purchasing cycles, global cloud giants are signing multi-year supply contracts with Samsung Electronics to lock in advanced chip capacity through at least 2028. Jaejune Kim, executive vice president of Samsung Electronics’ memory business, told market analysts that AI-driven hardware demand will continue to outpace production, predicting severe supply constraints by 2027.
To navigate the tightening market, Samsung Electronics has executed five-year supply agreements with five of the world’s largest data center operators and is finalizing terms with five more. The structural agreements incorporate floor pricing and advance capital commitments, locking in 60% to 70% of the company’s future memory production.
The push underscores how hyperscale artificial intelligence buildouts are reshaping global memory supply chains. High-Bandwidth Memory chips, which stack vertical layers of DRAM to accelerate data transfers to AI processors made by companies like Nvidia and AMD, have shifted from standard commodity purchasing to multi-year allocation models.
The structural shift follows a major surge in financial performance for the world’s largest memory maker. The semiconductor division at Samsung Electronics recorded an operating profit of 89.2 trillion won ($61.7 billion) in the second quarter—a more than 250-fold jump year-over-year. Overall revenue surged 130% to 171.5 trillion won, pushing total quarterly operating profit to 89.5 trillion won.
However, soaring DRAM prices have created internal pressures across other business units. Samsung Electronics reported a 700 billion won operating loss in its mobile business, marking its first quarterly loss as rising component expenses squeezed hardware margins. eToro analyst Josh Gilbert noted that while elevated chip prices bolster memory revenue, they simultaneously weigh on consumer hardware units, increasing total corporate exposure to hyperscaler spending patterns.
To expand its footprint in high-density chips, Samsung Electronics expects third-quarter revenue from HBM4 to more than triple, aiding its effort to close the market share gap with SK Hynix. While domestic competitor SK Hynix announced plans to boost capital expenditures by roughly 50% to expand AI memory production, Samsung Electronics is relying on its integrated manufacturing strategy.
Expansion projects outside Korea remain on track, with the primary facility in Taylor, Texas scheduled to begin manufacturing operations this year, followed by a second facility planned for mass production in 2030.
Despite recent U.S. capital moves by SK Hynix, Samsung Electronics Chief Financial Officer Park Soon-cheol confirmed the group has no plans to issue American depositary receipts, pointing to solid cash flows across its operating divisions.
