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Jukan Samsung Begins Tesla AI5 Wafer Processing… "Musk Also Attending Meetings" Samsung Electronics will soon begin pilot production of Tesla's AI5 chips. While the AI5 and AI6 chip foundry contracts are loss-making in the short term, the level of interest…
. The chips could be deployed across Tesla's entire AI value chain, including not only autonomous vehicles but also robotaxis, humanoid robots, and proprietary AI servers. Another semiconductor industry insider said, "The specific applications for the AI chips are expected to become clearer in the first half of this year," adding, "If Samsung Electronics' chip quality meets expectations, there is a high possibility this could expand into a $100 billion business."
The industry is also raising the possibility that Samsung Electronics' foundry division could achieve a turnaround to profitability next year. The division has continued to post annual losses of several trillion won until recently. Potential turning points for improved performance include the adoption of the next-generation mobile application processor "Exynos 2600" in the Galaxy S26 series, potential orders from big tech companies like Qualcomm and AMD, and increased utilization rates for 4-nanometer and 8-nanometer processes.
Kiwoom Securities noted in a recent report, "Samsung Electronics' foundry and System LSI divisions are expected to post annual operating losses of around 4 trillion won (this year), but there is also a possibility that the deficit could narrow further, driven by increased utilization of advanced process nodes." Heungkuk Securities projected, "As TSMC capacity shortages intensify, the visibility of Samsung Foundry's turnaround is increasing, with the Tesla contract as a catalyst."
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The industry is also raising the possibility that Samsung Electronics' foundry division could achieve a turnaround to profitability next year. The division has continued to post annual losses of several trillion won until recently. Potential turning points for improved performance include the adoption of the next-generation mobile application processor "Exynos 2600" in the Galaxy S26 series, potential orders from big tech companies like Qualcomm and AMD, and increased utilization rates for 4-nanometer and 8-nanometer processes.
Kiwoom Securities noted in a recent report, "Samsung Electronics' foundry and System LSI divisions are expected to post annual operating losses of around 4 trillion won (this year), but there is also a possibility that the deficit could narrow further, driven by increased utilization of advanced process nodes." Heungkuk Securities projected, "As TSMC capacity shortages intensify, the visibility of Samsung Foundry's turnaround is increasing, with the Tesla contract as a catalyst."
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Jukan
Memory Big 3 Change Contract Practices… Post-Settlement Pricing Emerges
Rising memory prices are now transforming supply contract practices. Contract durations are shifting from long-term to short-term, and a "post-settlement" concept reflecting market prices has emerged, moving away from negotiated fixed pricing.
Based on reporting by ETNews on the 4th, Samsung Electronics, SK hynix, and Micron — the major memory manufacturers — have recently been entering new types of product supply contracts. An industry insider familiar with the matter said, "As memory prices have surged, an unprecedented post-settlement pricing method has emerged, and ultra-short-term contracts are also being adopted."
Typically, memory products such as DRAM and NAND have prices specified at the time of the initial supply contract. With fixed transaction prices, even if market conditions change and prices rise or fall, adjustments are generally made within approximately 10% through negotiations. For example, if a contract is signed to supply DRAM at 100 won, the price mostly holds for about one year. If there are price fluctuations, quarterly negotiations within the contract period adjust it to 110 won (+10%) or 90 won (-10%) for supply in the following quarter.
However, recently, contracts have been emerging where price increases are compensated retroactively to reflect market rates even after supply has been delivered. In other words, even if a contract was signed to supply DRAM at 100 won for one year, if DRAM market prices have risen 100% by the end of the contract period, an additional 100 won is paid. This is essentially a post-settlement arrangement.
All three major memory companies have already signed contracts using this method, and the counterparties are primarily North American big tech clients. While this could be disadvantageous for suppliers if memory prices fall, analysts note that the risk is minimal since price increases are currently expected to far outweigh the risk of decline.
Another industry insider explained, "From major clients' perspective, securing memory supply is currently more important than the contract format," adding, "They have determined that it is urgent to lock in supply contracts first, even if additional costs arise later."
Contract durations are also changing. Memory clients want long-term contracts of two years or more, beyond the typical one year, to secure stable memory supply for the expansion of artificial intelligence (AI) infrastructure. However, memory manufacturers as suppliers are increasingly reluctant to agree to this. Supply is tight and price volatility is high. There is a risk that locking into a long-term supply contract with one client could mean missing opportunities to secure other clients on better terms.
As a result, contracts have reportedly shifted from annual to quarterly, and even monthly terms. In one known case, a North American data center operator A requested a two-year long-term supply contract from one memory manufacturer but was rejected, and barely managed to secure a supply commitment from another manufacturer. This contract also included the post-settlement pricing method for price increases.
An industry insider said, "This supplier-favorable contracting trend is expected to continue at least until the second half of the year, when the upward momentum in memory prices is expected to moderate."
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Memory Big 3 Change Contract Practices… Post-Settlement Pricing Emerges
Rising memory prices are now transforming supply contract practices. Contract durations are shifting from long-term to short-term, and a "post-settlement" concept reflecting market prices has emerged, moving away from negotiated fixed pricing.
Based on reporting by ETNews on the 4th, Samsung Electronics, SK hynix, and Micron — the major memory manufacturers — have recently been entering new types of product supply contracts. An industry insider familiar with the matter said, "As memory prices have surged, an unprecedented post-settlement pricing method has emerged, and ultra-short-term contracts are also being adopted."
Typically, memory products such as DRAM and NAND have prices specified at the time of the initial supply contract. With fixed transaction prices, even if market conditions change and prices rise or fall, adjustments are generally made within approximately 10% through negotiations. For example, if a contract is signed to supply DRAM at 100 won, the price mostly holds for about one year. If there are price fluctuations, quarterly negotiations within the contract period adjust it to 110 won (+10%) or 90 won (-10%) for supply in the following quarter.
However, recently, contracts have been emerging where price increases are compensated retroactively to reflect market rates even after supply has been delivered. In other words, even if a contract was signed to supply DRAM at 100 won for one year, if DRAM market prices have risen 100% by the end of the contract period, an additional 100 won is paid. This is essentially a post-settlement arrangement.
All three major memory companies have already signed contracts using this method, and the counterparties are primarily North American big tech clients. While this could be disadvantageous for suppliers if memory prices fall, analysts note that the risk is minimal since price increases are currently expected to far outweigh the risk of decline.
Another industry insider explained, "From major clients' perspective, securing memory supply is currently more important than the contract format," adding, "They have determined that it is urgent to lock in supply contracts first, even if additional costs arise later."
Contract durations are also changing. Memory clients want long-term contracts of two years or more, beyond the typical one year, to secure stable memory supply for the expansion of artificial intelligence (AI) infrastructure. However, memory manufacturers as suppliers are increasingly reluctant to agree to this. Supply is tight and price volatility is high. There is a risk that locking into a long-term supply contract with one client could mean missing opportunities to secure other clients on better terms.
As a result, contracts have reportedly shifted from annual to quarterly, and even monthly terms. In one known case, a North American data center operator A requested a two-year long-term supply contract from one memory manufacturer but was rejected, and barely managed to secure a supply commitment from another manufacturer. This contract also included the post-settlement pricing method for price increases.
An industry insider said, "This supplier-favorable contracting trend is expected to continue at least until the second half of the year, when the upward momentum in memory prices is expected to moderate."
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Jukan
The Big 3 memory companies are basically extorting money at this point. They're refusing to honor the prices from previously signed contracts and are pressuring people to pay according to current market prices lol https://t.co/7ikDqMCuSx
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The Big 3 memory companies are basically extorting money at this point. They're refusing to honor the prices from previously signed contracts and are pressuring people to pay according to current market prices lol https://t.co/7ikDqMCuSx
Memory Big 3 Change Contract Practices… Post-Settlement Pricing Emerges
Rising memory prices are now transforming supply contract practices. Contract durations are shifting from long-term to short-term, and a "post-settlement" concept reflecting market prices has emerged, moving away from negotiated fixed pricing.
Based on reporting by ETNews on the 4th, Samsung Electronics, SK hynix, and Micron — the major memory manufacturers — have recently been entering new types of product supply contracts. An industry insider familiar with the matter said, "As memory prices have surged, an unprecedented post-settlement pricing method has emerged, and ultra-short-term contracts are also being adopted."
Typically, memory products such as DRAM and NAND have prices specified at the time of the initial supply contract. With fixed transaction prices, even if market conditions change and prices rise or fall, adjustments are generally made within approximately 10% through negotiations. For example, if a contract is signed to supply DRAM at 100 won, the price mostly holds for about one year. If there are price fluctuations, quarterly negotiations within the contract period adjust it to 110 won (+10%) or 90 won (-10%) for supply in the following quarter.
However, recently, contracts have been emerging where price increases are compensated retroactively to reflect market rates even after supply has been delivered. In other words, even if a contract was signed to supply DRAM at 100 won for one year, if DRAM market prices have risen 100% by the end of the contract period, an additional 100 won is paid. This is essentially a post-settlement arrangement.
All three major memory companies have already signed contracts using this method, and the counterparties are primarily North American big tech clients. While this could be disadvantageous for suppliers if memory prices fall, analysts note that the risk is minimal since price increases are currently expected to far outweigh the risk of decline.
Another industry insider explained, "From major clients' perspective, securing memory supply is currently more important than the contract format," adding, "They have determined that it is urgent to lock in supply contracts first, even if additional costs arise later."
Contract durations are also changing. Memory clients want long-term contracts of two years or more, beyond the typical one year, to secure stable memory supply for the expansion of artificial intelligence (AI) infrastructure. However, memory manufacturers as suppliers are increasingly reluctant to agree to this. Supply is tight and price volatility is high. There is a risk that locking into a long-term supply contract with one client could mean missing opportunities to secure other clients on better terms.
As a result, contracts have reportedly shifted from annual to quarterly, and even monthly terms. In one known case, a North American data center operator A requested a two-year long-term supply contract from one memory manufacturer but was rejected, and barely managed to secure a supply commitment from another manufacturer. This contract also included the post-settlement pricing method for price increases.
An industry insider said, "This supplier-favorable contracting trend is expected to continue at least until the second half of the year, when the upward momentum in memory prices is expected to moderate." tweet
Illiquid
I expect to find only a handful of top tier ideas every year. In the last five months, I found the following companies within 30 miles of where I live: a diesel genset company, a cable manufacturer, two builders, and Wasion. Will publish a post on my new favourite idea next week. The strongest idea yet I think, which is saying alot because Kwan Yong Holdings is still so cheap.
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I expect to find only a handful of top tier ideas every year. In the last five months, I found the following companies within 30 miles of where I live: a diesel genset company, a cable manufacturer, two builders, and Wasion. Will publish a post on my new favourite idea next week. The strongest idea yet I think, which is saying alot because Kwan Yong Holdings is still so cheap.
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Jukan
UBS raised its price target on Micron to $450 with the following commentary...
"More importantly, synthesizing industry conversations suggests that memory supply shortages could extend deeper through C2027 — DRAM could remain in a supply deficit through C4Q27, and NAND could be in shortage through C1Q27.
This is occurring despite our view that accelerating memory price inflation will cause some demand destruction and spec-downs in PCs and smartphones (accordingly, we have lowered related estimates). The key takeaway is that strong data center demand is more than offsetting these headwinds.
(omitted)...
We are modeling gross margins of 69.9%, with an increase sequentially in the May quarter (MayQ) to approximately 74.4%. Accordingly, we expect gross margins to peak in the low 80% range across C1Q27E/C2Q27E."
$MU
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UBS raised its price target on Micron to $450 with the following commentary...
"More importantly, synthesizing industry conversations suggests that memory supply shortages could extend deeper through C2027 — DRAM could remain in a supply deficit through C4Q27, and NAND could be in shortage through C1Q27.
This is occurring despite our view that accelerating memory price inflation will cause some demand destruction and spec-downs in PCs and smartphones (accordingly, we have lowered related estimates). The key takeaway is that strong data center demand is more than offsetting these headwinds.
(omitted)...
We are modeling gross margins of 69.9%, with an increase sequentially in the May quarter (MayQ) to approximately 74.4%. Accordingly, we expect gross margins to peak in the low 80% range across C1Q27E/C2Q27E."
$MU
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Michael Fritzell (Asian Century Stocks)
There’s been proliferation of AI generated content on Substack, too, but it tends not to be very good
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There’s been proliferation of AI generated content on Substack, too, but it tends not to be very good
The past year has seen an explosion in coding productivity @FT https://t.co/XhcrqLkxzv tweet
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The Transcript
RT @TheTranscript_: Alphabet CBO: "For FY 2025, our YouTube's annual revenue surpassed $60B across ads and subscriptions. In Q4, YouTube ads was driven, indeed, by strong growth and direct response." $GOOG $GOOGL https://t.co/oB5gWSIFmX
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RT @TheTranscript_: Alphabet CBO: "For FY 2025, our YouTube's annual revenue surpassed $60B across ads and subscriptions. In Q4, YouTube ads was driven, indeed, by strong growth and direct response." $GOOG $GOOGL https://t.co/oB5gWSIFmX
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Jukan
* Reuters: Intel told customers in China that lead times for its server CPUs could be as long as six months.
* Reuters: Intel raised prices for server CPUs sold to China by 10%.
* Reuters: AMD said lead times for some of its products have extended to 8–10 weeks.
$AMD $INTC https://t.co/T0i9NrwXNH
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* Reuters: Intel told customers in China that lead times for its server CPUs could be as long as six months.
* Reuters: Intel raised prices for server CPUs sold to China by 10%.
* Reuters: AMD said lead times for some of its products have extended to 8–10 weeks.
$AMD $INTC https://t.co/T0i9NrwXNH
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Michael Fritzell (Asian Century Stocks)
Key point from that Bloomberg article about Minal Bathwal: read Kahneman's book https://t.co/31AlkJvzCB
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Key point from that Bloomberg article about Minal Bathwal: read Kahneman's book https://t.co/31AlkJvzCB
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App Economy Insights
RT @EconomyApp: $AMZN Amazon Q4 FY25:
• Revenue +14% Y/Y to $213.4B ($2.2B beat).
• Operating margin 12% (+0.4pp Y/Y).
• EPS $1.95 ($0.01 miss).
• Q1 FY26 rev guide: +11%–15% Y/Y.
☁️ AWS:
• Revenue +24% Y/Y to $35.6B.
• Operating margin 35% (-2pp Y/Y). https://t.co/169cUDweIt
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RT @EconomyApp: $AMZN Amazon Q4 FY25:
• Revenue +14% Y/Y to $213.4B ($2.2B beat).
• Operating margin 12% (+0.4pp Y/Y).
• EPS $1.95 ($0.01 miss).
• Q1 FY26 rev guide: +11%–15% Y/Y.
☁️ AWS:
• Revenue +24% Y/Y to $35.6B.
• Operating margin 35% (-2pp Y/Y). https://t.co/169cUDweIt
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