📌 SanDisk's Long-Term Contract Price Lock Tests End-Market Pass-Through Capacity
The significance of NAND shortages is shifting from rising spot quotations to whether suppliers can write prices and revenue into long-term contracts. SanDisk disclosed that its NBM long-term agreements already cover 8 customers, locking in approximately 60% of capacity for 2027 to 2028. The agreements run for up to 5 years, with a weighted average term of 4 years. Calculated at the contractual floor prices, the minimum contracted revenue corresponding to signed agreements is USD 93 billion.
The key to such arrangements is not merely order volume, but the price floor. If customers commit to covering part of future capacity and accept minimum prices, SanDisk’s revenue visibility will be higher than if it relied solely on spot market conditions. However, this does not mean profits are already locked in. Actual profitability still depends on delivery pace, costs, and the pricing of remaining capacity.
Whether end markets can absorb the cost increase is the more important next validation. Counterpoint’s bill-of-materials cost comparison shows that the 12GB+1TB iPhone 18 Pro Max costs nearly USD 300 more than its predecessor, with storage being the main driver. The source believes Apple may raise retail prices in tiers based on storage capacity to protect the gross margins of high-capacity versions.
Therefore, the protection provided to upstream players by long-term agreements has become more concrete, but whether its effect can penetrate through to the consumer electronics end market still depends on whether demand remains stable after price increases for high-storage versions. If end markets cannot pass through the costs, brands will bear greater cost pressure, and future procurement pace may also become more cautious.
▌ Sources