Samsung CEO Pushes Multi-Year Chip Deals to Tame AI Supercycle

At the company's annual shareholder meeting in Suwon, Samsung Electronics co-CEO Jun Young-hyun delivered a message that was both confident and cautious: the chip industry is about to enter a "unprecedented supercycle" driven by investments in AI data centers, and Samsung plans to lock in that demand before the cycle turns. 

The main component of that approach is the transition from quarterly or annual supply agreements to multi-year contracts that last three to five years. This structural transformation would significantly change how the biggest memory chipmaker in the world handles revenue visibility.

Since January, Samsung's stock has increased by 62%, much surpassing the 34% increase in the Korean market as a whole. The stock increased 7.5% just on the day of the meeting.

Why Multi-Year Contracts — and Why Now？

Samsung has experienced enough boom-bust cycles in the memory chip sector to understand that today's scarcity could turn into tomorrow's oversupply. Jun's plan specifically addresses that volatility. Samsung hopes to mitigate the peaks and troughs that have frequently hurt chipmakers and their investors by locking large customers into supply contracts spanning three to five years.

The timing is not coincidental. Spending on AI infrastructure is creating the kind of long-term, sustainable demand that attracts both parties to long-term contracts. To carry out their buildout plans, hyperscalers and data center operators require an assured memory supply. To justify the significant capital expenditure needed to increase wafer capacity, Samsung needs revenue certainty. Both the urgency and the convergence of interests are genuine.

Earlier this week, Chey Tae-won, chairman of SK Group, reaffirmed the scarcity theory and cautioned that the worldwide shortage of chip wafers is expected to last for an additional four to five years. Similar goals regarding the stabilization of DRAM prices have been indicated by SK Hynix. The market tends to pay attention when the two leading Korean memory manufacturers are concurrently pursuing the same strategic goal.

The HBM Gap Is Narrowing — and Nvidia Is Noticing

Jun apologized in front of shareholders a year ago. Samsung failed to capitalize on the first surge in demand for high-bandwidth memory (HBM), which gave rival SK Hynix a commanding 57% market dominance. Samsung's stock price and profitability suffered greatly as a result of the blunder.

The circumstances have changed. CEO Jensen Huang formally announced a foundry cooperation with Samsung at Nvidia's GTC Conference, praising the company's HBM4 chips. Given that Nvidia is the world's largest purchaser of AI chips, this endorsement has significant financial weight. Jun affirmed that Samsung, which had mostly given up this position to SK Hynix until 2024, is now a crucial partner in Nvidia's AI infrastructure supply chain.

Conventional DRAM and NAND costs have also skyrocketed; according to Counterpoint Research, server memory chip prices increased 60% to 76% in Q4 2025. This has given Samsung the profits momentum that had eluded it during the previous down cycle. Separately, Samsung and Nvidia are working together to expedite the development of next-generation NAND flash memory, further strengthening their relationship.

The Risks Jun Didn't Downplay

Despite her optimism, Jun was realistic about what might go wrong. He pointed out that rising memory costs could hinder shipments of PCs and smartphones, which are part of Samsung's consumer-facing "set business" that includes appliances, phones, and televisions. The demand forecast is further unpredictable due to macroeconomic volatility and tariff uncertainties. 

Additionally, an impending labor dispute—Samsung's unions have decided to go on strike in May because to a growing pay disparity with SK Hynix, whose average employee salary increased by 58% last year—introduces operational risk, which shareholders specifically brought up during the meeting.

If properly negotiated, multi-year contracts would significantly reduce the volatility of Samsung's earnings profile. This would be a true re-rating catalyst for a stock that the market has traditionally punished for cyclicality. The competitive narrative that affected shares through 2024 is addressed by the Nvidia relationship and the advancement of HBM4. Risks in the near future are serious but controllable. The question is whether Samsung can implement the contract strategy quickly enough to seize it, but the supercycle premise remains intact.