Institutions: HBM Expected to Increase in Price by 80%–100% in Q1 Next Year, Long-term Storage Contracts May Be Locked Until 2035

The demand for AI data centers continues to heat up, fundamentally reshaping the global supply-demand landscape and pricing mechanism of the storage chip market.

KeyBanc Capital Markets analyst John Vinh released a report after conducting research in Asia, stating that High Bandwidth Memory (HBM) prices are expected to rise 80% to 100% quarter-on-quarter in Q1 2027, DRAM prices will increase 15% to 20% quarter-on-quarter in Q4 this year, and NAND prices will rise by about 20%. Meanwhile, storage suppliers are decisively shifting capacity towards data centers, and it is expected that supply for PCs and smartphones will decrease by 20% to 30% next year as a result.

The trend of supply lock-in is intensifying simultaneously. Vinh notes that HP and Dell have extended supply agreements to 2031, and Google is negotiating long-term agreements running up to 2035, indicating the duration of this storage upcycle far exceeds previous cycles. Previously, an article by Wallstreet Insights reported that about 80% of Samsung Electronics' storage chip capacity for next year has already been locked in through long-term agreements. Tech giants such as Nvidia, Google, and Microsoft are competing for the remaining 20% of capacity, with market bargaining power rapidly shifting towards suppliers.

HBM Leading Gains, DRAM and NAND Rising Across the Board

KeyBanc’s Asian research results show that robust AI and data center demand is creating a structural storage shortage and driving prices up across the board.

Vinh expects DRAM prices to rise 15% to 20% quarter-on-quarter in Q4 this year, NAND by about 20%, and HBM prices to see the most aggressive hike, projected to rise 80% to 100% quarter-on-quarter in Q1 2027.

The capacity allocation strategies of storage suppliers are the key driving force behind the price increases. Vinh states that suppliers plan to shift more capacity to data centers, reducing storage supply for PCs and smartphones by 20% to 30% next year, further constricting available supply in the consumer electronics market.

In terms of beneficiaries, Vinh believes the research findings are most positive for Micron, while also raising earnings forecasts for analog chip manufacturers including Analog Devices, Microchip, Texas Instruments, and NXP.

In the analog chip sector, Vinh notes that strong demand in industrial and data center markets has resulted in an overall trend that is better than expected, with some product lead times extending to around 26 weeks and some categories even as long as a year. Consequently, he raised earnings forecasts for Analog Devices, Microchip, Texas Instruments, and NXP.

However, Cirrus Logic stands out as an exception in this research. Vinh downgraded the stock from “Overweight” to “Sector Weight” due to roughly 80% of its revenue relying on Apple, which has cut wafer orders from TSMC, equivalent to cutting production for 15 to 20 million iPhones.

“Therefore, CRUS’s growth prospects over the next 6 to 12 months appear limited,” he wrote. Additionally, Vinh pointed out that due to high storage prices, Cirrus Logic’s attempt to diversify into the PC market may be delayed.

Long-term Agreements Expand, Lock-in Period Extends to 2035

The trend of supply lock-in has become a key feature distinguishing this storage cycle from previous ones.

Vinh notes in the report that HP and Dell have extended their supply agreements to 2031, and Google is negotiating long-term agreements up to 2035. He believes these moves show this storage upcycle has greater sustainability.

Wallstreet Insights article stated that about 80% of Samsung Electronics’ storage chips (including HBM) for next year are already locked in via long-term agreements, leaving tech companies without contracts to compete for the remaining 20% of capacity. In its Q2 earnings call, Samsung Electronics stated, "almost all major customers are applying for long-term agreements," frankly admitting it is "difficult to meet all demand."

Samsung is not alone — SK Hynix has completed long-term agreements with major customers; the number of strategic customer agreements for Micron Technology increased from 16 in Q2 to 26 in Q3; NAND flash manufacturer SanDisk has also signed long-term agreements with eight customers, including several large technology companies.

This trend has a structural background. Quarterly contracts and spot transactions have long been the industry norm in semiconductors, making it difficult for chip manufacturers to predict future pricing and demand trends. As global technology companies heavily ramp up investment in AI data centers this year, securing stable storage supply has become an overriding strategic goal, accelerating the adoption of long-term agreements.

Long-term Agreements Spread Across the AI Infrastructure Value Chain

Wallstreet Insights article noted that the surge in long-term agreements has broken through the bounds of storage chips and is spreading across the entire AI infrastructure industry chain.

In the components sector, Samsung Electro-Mechanics is about to sign a long-term supply agreement for multi-layer ceramic capacitors (MLCC) worth 700 billion won (about $507 million) with Delta Electronics, which will be its seventh such agreement completed this year. The total order volume for the year is expected to reach 4.6 trillion won (about $3.33 billion). LG Innotek is also engaging in long-term agreement negotiations for flip-chip ball grid array substrates (FC-BGA).

The same trend is occurring in power and cooling infrastructure. LS Cable & System has entered into five-year busbar long-term agreements with US tech companies such as Meta and Google; HD Hyundai Electric is negotiating long-term agreements for data center transformers; LG Electronics has signed a chiller supply contract worth 5 trillion won (about $3.62 billion) with US-based AI data center infrastructure company Air.

In the storage sector, a five-year term has become the standard base period for long-term agreements, with a one-year extension clause for rolling renewal each year. High advance payments of 20% to 25% have become standard, along with strict mandatory procurement clauses — meaning customers must pay as agreed even if they do not take delivery. Suppliers sometimes use these advance payments as funds for large-scale wafer fab construction.

Because manufacturers cannot expand capacity fast enough to keep up with demand growth, the supply-demand imbalance continues to widen and market bargaining power has shifted substantially to the suppliers. This model reflects the deep binding of interests between technology giants and component manufacturers: the former seeks a stable supply chain, while the latter hedges capex risks with such agreements.