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Jukan
Apparently memory makers are trying to keep LTAs as short as possible.
And even when they do sign LTAs, they're locking in contracts with "non-cancellable, non-returnable terms and no price negotiation" lol
Supply Shortage Reshapes LTA Dynamics… Contract Periods Shrink and Power Balance Flips
As the supply shortage drags on, the trading order in the memory semiconductor market is rapidly being reorganized. With the semiconductor supply crunch persisting over an extended period, the initiative in long-term supply agreements (LTAs) is shifting from customers to semiconductor suppliers. In the past, smartphone and PC manufacturers seeking stable procurement were the ones to propose long-term contracts first, but recently memory chipmakers such as Samsung Electronics and SK hynix have been presenting contract terms first, signaling a shift in the market's balance of power.
According to industry sources on the 9th, the contract periods of LTAs recently signed by Korean memory chipmakers are getting shorter. LTA durations vary from six months to one year depending on the product and end customer, but industry insiders universally say these periods have been shrinking lately.
The analysis is that as the semiconductor supply shortage continues, suppliers are opting for shorter contract periods. In a rising-price environment, shorter contract durations allow suppliers to reflect updated pricing more quickly, giving them an advantage in negotiations.
The initiative in LTAs is also shifting from customers to memory suppliers. Previously, it was common for smartphone and PC makers to propose long-term supply agreements first to secure volume, but recently Samsung Electronics and SK hynix are increasingly taking the lead in setting contract terms and structures. As the semiconductor supply shortage extends, the center of gravity in business relationships is tilting toward suppliers.
Lee Jong-wook, a researcher at Samsung Securities, analyzed: "It was customers who first proposed long-term supply agreements, but now memory suppliers are leading the LTAs. NCNR (non-cancellable, non-returnable) contracts with no price negotiation are expanding to PCs, mobile, and commodity DRAM, causing the volume of available spot supply in the market to shrink dramatically."
Stockpiling behavior is also emerging. According to market research firm TrendForce, smartphone manufacturers are being extremely cautious about immediately reducing their LTA-based memory purchase volumes this year. TrendForce noted: "Concerned about further price increases and potential supply shortages, they are preemptively prioritizing resource procurement to avoid future allocation restrictions." In other words, despite slowing global smartphone demand and a negative market outlook, companies are stocking up on semiconductors out of fear of supply constraints and additional procurement cost increases ahead.
For smartphone makers, rather than cutting production or trimming contracted volumes right away, the more pressing concern has become whether they can receive memory shipments on time going forward. The worry is that tampering with contracts now could mean failing to secure adequate volume next quarter or next year, or having to re-contract at even higher prices. So even in an unfavorable market, they appear to be maintaining their long-term supply agreements as-is.
Memory chipmakers share this view. During the conference call following its Q4 earnings announcement, SK hynix explained: "In the past, LTAs had loose volume commitments and were highly flexible depending on market conditions. The LTAs being discussed recently are not mere purchase intentions but arrangements where customers and suppliers firmly commit volumes to each other." This implies that from the supplier's perspective, demand visibility has become far more important than before.
An industry insider said: "In this unprecedented memory supply shortage, the power dynamic between buyer and seller is reversing.[...]
Apparently memory makers are trying to keep LTAs as short as possible.
And even when they do sign LTAs, they're locking in contracts with "non-cancellable, non-returnable terms and no price negotiation" lol
Supply Shortage Reshapes LTA Dynamics… Contract Periods Shrink and Power Balance Flips
As the supply shortage drags on, the trading order in the memory semiconductor market is rapidly being reorganized. With the semiconductor supply crunch persisting over an extended period, the initiative in long-term supply agreements (LTAs) is shifting from customers to semiconductor suppliers. In the past, smartphone and PC manufacturers seeking stable procurement were the ones to propose long-term contracts first, but recently memory chipmakers such as Samsung Electronics and SK hynix have been presenting contract terms first, signaling a shift in the market's balance of power.
According to industry sources on the 9th, the contract periods of LTAs recently signed by Korean memory chipmakers are getting shorter. LTA durations vary from six months to one year depending on the product and end customer, but industry insiders universally say these periods have been shrinking lately.
The analysis is that as the semiconductor supply shortage continues, suppliers are opting for shorter contract periods. In a rising-price environment, shorter contract durations allow suppliers to reflect updated pricing more quickly, giving them an advantage in negotiations.
The initiative in LTAs is also shifting from customers to memory suppliers. Previously, it was common for smartphone and PC makers to propose long-term supply agreements first to secure volume, but recently Samsung Electronics and SK hynix are increasingly taking the lead in setting contract terms and structures. As the semiconductor supply shortage extends, the center of gravity in business relationships is tilting toward suppliers.
Lee Jong-wook, a researcher at Samsung Securities, analyzed: "It was customers who first proposed long-term supply agreements, but now memory suppliers are leading the LTAs. NCNR (non-cancellable, non-returnable) contracts with no price negotiation are expanding to PCs, mobile, and commodity DRAM, causing the volume of available spot supply in the market to shrink dramatically."
Stockpiling behavior is also emerging. According to market research firm TrendForce, smartphone manufacturers are being extremely cautious about immediately reducing their LTA-based memory purchase volumes this year. TrendForce noted: "Concerned about further price increases and potential supply shortages, they are preemptively prioritizing resource procurement to avoid future allocation restrictions." In other words, despite slowing global smartphone demand and a negative market outlook, companies are stocking up on semiconductors out of fear of supply constraints and additional procurement cost increases ahead.
For smartphone makers, rather than cutting production or trimming contracted volumes right away, the more pressing concern has become whether they can receive memory shipments on time going forward. The worry is that tampering with contracts now could mean failing to secure adequate volume next quarter or next year, or having to re-contract at even higher prices. So even in an unfavorable market, they appear to be maintaining their long-term supply agreements as-is.
Memory chipmakers share this view. During the conference call following its Q4 earnings announcement, SK hynix explained: "In the past, LTAs had loose volume commitments and were highly flexible depending on market conditions. The LTAs being discussed recently are not mere purchase intentions but arrangements where customers and suppliers firmly commit volumes to each other." This implies that from the supplier's perspective, demand visibility has become far more important than before.
An industry insider said: "In this unprecedented memory supply shortage, the power dynamic between buyer and seller is reversing.[...]
Offshore
Jukan Apparently memory makers are trying to keep LTAs as short as possible. And even when they do sign LTAs, they're locking in contracts with "non-cancellable, non-returnable terms and no price negotiation" lol Supply Shortage Reshapes LTA Dynamics… Contract…
Even as consumer electronics demand slows, semiconductor supply contracts are being maintained — and these contracts are, in turn, entrenching the supply shortage and price increases in a self-reinforcing cycle."
$MU $SNDK - Jukan tweet
$MU $SNDK - Jukan tweet
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Moon Dev
quant zoom
our private quant zoom is starting at 7 am eastern
i will likely be live until about 11 am
if you get in before the end you get the free api key free ai access free quant app and all replays
join here https://t.co/JbJdIbW2p9
moon dev
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quant zoom
our private quant zoom is starting at 7 am eastern
i will likely be live until about 11 am
if you get in before the end you get the free api key free ai access free quant app and all replays
join here https://t.co/JbJdIbW2p9
moon dev
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The Transcript
RT @TheTranscript_: $INTC CEO on cimpute demand:
"Almost every CEO, they call me, Lip-Bu, can I have more? I'm your friend. I'm your customer, the most important customer, I want to have more of that. So I think somehow it's kind of encouraging for me to see that compute has become very important."
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RT @TheTranscript_: $INTC CEO on cimpute demand:
"Almost every CEO, they call me, Lip-Bu, can I have more? I'm your friend. I'm your customer, the most important customer, I want to have more of that. So I think somehow it's kind of encouraging for me to see that compute has become very important."
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Benjamin Hernandez😎
NatWest agreed to buy wealth manager Evelyn Partners for $3.7B, highlighting consolidation in asset and advisory services. Investors are tracking margin pressure and scale benefits across fintech-led rivals.
$IBKR
$LPLA
$COIN https://t.co/KfedrPoCfu
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NatWest agreed to buy wealth manager Evelyn Partners for $3.7B, highlighting consolidation in asset and advisory services. Investors are tracking margin pressure and scale benefits across fintech-led rivals.
$IBKR
$LPLA
$COIN https://t.co/KfedrPoCfu
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Michael Fritzell (Asian Century Stocks)
RT @InvestInJapan: This is highly relevant for CYND, for the first time Recruit disclosed their hot pepper beauty sales and GMV.
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RT @InvestInJapan: This is highly relevant for CYND, for the first time Recruit disclosed their hot pepper beauty sales and GMV.
リクルートがついにホットペッパービューティーの売上高を開示したんですが、ショックすぎて声でない。
ホットペッパービューティーの売上
・売上高：1,260億円
・ホトペ経由の予約流通総額：1.1兆円
美容サロン市場規模は2.7兆円。つまり40.7%の予約がホットペッパー経由らしい。 https://t.co/4CviWyKv8u tweet
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Michael Fritzell (Asian Century Stocks)
RT @xruiztru: 6 year ago today, Dr. Li Wenliang passed away of COVID-19.
He warned the world about a virus outbreak in Wuhan. The government silenced him.
The rest is history. https://t.co/VuPOEDhZOp
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RT @xruiztru: 6 year ago today, Dr. Li Wenliang passed away of COVID-19.
He warned the world about a virus outbreak in Wuhan. The government silenced him.
The rest is history. https://t.co/VuPOEDhZOp
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The Transcript
RT @TheTranscript_: $UBER CFO @_balaji_km: Uber's profit engine lies in smaller U.S. markets, not top cities
"this is a very, very common misconception. We've heard many times that Uber's profit pools are concentrated in the top cities, and it could not be further from the truth." https://t.co/KvEaIn4beM
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RT @TheTranscript_: $UBER CFO @_balaji_km: Uber's profit engine lies in smaller U.S. markets, not top cities
"this is a very, very common misconception. We've heard many times that Uber's profit pools are concentrated in the top cities, and it could not be further from the truth." https://t.co/KvEaIn4beM
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