Bank of America Merrill Lynch: Samsung Long-Term Pricing to Have Downside Limit, No Upside Limit, Storage Demand to Continue Upward Trend Through 2028

August 2nd, Bank of America Merrill Lynch released a storage industry research report over the weekend, showing that Samsung Electronics has incorporated 60% to 70% of its memory sales into a long-term supply agreement system. The contract terms significantly favor the supply side—quarterly price reductions usually do not exceed 5%, but the price increase potential can reach 10% to 20% with virtually no upper limit. LTAs signed with large U.S. tech companies mainly follow a five-year rolling model, allowing for renewal around the expiration of the first-year contract, creating long-term commitments.

Bank of America Merrill Lynch believes that this model enhances the revenue certainty of Samsung's storage business while retaining pricing flexibility during supply-demand tight periods. Against the backdrop of continued growth in AI server demand and ongoing capacity release by storage manufacturers, top-tier companies are locking in large customer demand through long-term agreements and strengthening price control.

According to DRAMeXchange data, the spot price of 16Gb DDR5 has increased by 733% year-on-year to $51, with even higher increases in the DDR4 series ranging from 722% to 896%; the spot price of 1Tb NAND wafers has risen by 415% year-on-year to $26.4, with a further 3% increase on a weekly basis. Contract prices for 64GB DDR5 memory modules have exceeded $1,480, while DDR4 modules have reached $1,300, both reaching historic highs; client SSD prices have doubled since the end of 2025.

Bank of America Merrill Lynch attributes the support for August prices to three factors: increased downstream restocking demand, OEM manufacturers stocking up on new products, and declining channel inventory. The underlying driver comes from the AI capital expenditure surge—the combined capital expenditure of the five hyperscale cloud companies is expected to reach $730 billion in 2026, a year-on-year increase of about 100%, with the potential to surpass $1 trillion annually from 2027 to 2028, continually supporting the upward trend in storage demand.