Long-Term Agreements on Korea Invest Insights

Samsung and SK Hynix Locked In 2027–28 Volume. Their Long-Term Contracts Do Not Lock In Profit.

Thu, 29 Oct 2026 13:30:00 +0900

On its earnings call on October 29, Samsung Electronics said it had signed long-term agreements (LTAs) with 10 customers, was negotiating with 10 more, and aimed to cover 60–70% of its capacity through 2030. A day earlier, SK hynix said LTAs with 14 major customers cover more than half of its 2027 and 2028 capacity. On its call, the company described DRAM and HBM as effectively sold out through 2029.

Those are the strongest statements either company has made about demand. Their legal filings say something narrower. Samsung’s half-year report notes that the total order value and delivery period of its multi-year contracts may change with customer demand. SK hynix’s half-year report says it sets volumes and prices monthly and quarterly by mutual agreement and has no order backlog based on long-term contracts. On the buyer side, Alphabet’s CFO called a $924 billion purchase-commitment figure a maximum and said many contracts carry price and volume flexibility.

Our judgment: both companies’ LTAs are B-grade contracts. They lock in 2027–28 volume at market-linked prices. They are not a floor under profit. Delivery in 2027 looks safe, because the shortage itself enforces the contracts. How much the contracts protect profit in a downturn cannot be calculated until the price floor, the penalty terms and the size of deposits are disclosed. This does not change our scenario weights.

This article is dated October 29, 2026, after Samsung’s earnings call. Samsung and SK hynix balance-sheet figures are as of June 30, from their half-year reports. Microsoft and Meta figures are as of September 30. Alphabet had not filed its third-quarter 10-Q at the time of writing, so its $924 billion figure and the flexibility remark come from a call transcript. Statements from both Korean calls are taken from Korean press reports.

Five things to take away

The firm part of the coverage is 2027–28. SK hynix has disclosed more than 50% of 2027 and 2028 capacity under contract. Samsung’s 60–70% through 2030 is a target. “Sold out through 2029” adds demand still under discussion to contracts already signed.
Call language is about volume; filing language is about flexibility. Both are true. The gap is one reason Korean memory still trades at a low multiple of 2027 earnings.
Buyers wrote the mirror image. Suppliers say terms may change. Alphabet says it may spend less than the maximum. Meta does not count variable obligations beyond minimum quantities or prices. A downturn after 2028 would travel through deferred volume and the bottom of price bands, not through broken contracts.
Some of the collateral stays with the buyer. Meta holds $10.8 billion in escrow, to be released in 2028–30. Microsoft holds $12.6 billion of investments restricted under a supplier agreement. That pattern fits SK hynix showing only ₩0.57 trillion of contract liabilities and advances.
Neither Korean company wins on contract quality. Samsung’s collateral is visible on its balance sheet. SK hynix is more specific about 2027–28 coverage, and it keeps about half its capacity outside LTAs, which raises both its upside and its downside.

A memory contract is only as strong as what the buyer must do in a downturn

“LTA” covers very different documents. We sort them into three grades by one test: what the buyer must still do when demand falls.

Grade	What the contract contains	What happens in a downturn
A	Prepayment or deposit, take-or-pay, minimum volume, cancellation penalty	The buyer pays even if it takes less; the supplier keeps the cash
B	Committed volume; price linked to the market and reset periodically, sometimes inside a band	Volume is deferred and price falls to the bottom of the band
C	Forecasts, letters of intent, double ordering	Orders disappear

Take-or-pay means the buyer pays for the contracted volume even if it takes less. Micron is the useful benchmark: it is the only one of the three large memory makers that discloses A-grade terms in its filings, although only for part of its revenue.

Both Korean contracts grade B; Micron is closest to A

The table answers one question: if demand weakens in 2028, what in the contract keeps the buyer paying?

	Samsung Electronics	SK hynix	Micron (benchmark)
Signed	10 customers signed, 10 in talks	14 major customers	26 strategic customer agreements
Coverage	Target: 60–70% of capacity through 2030	Secured: more than 50% of 2027 and 2028 capacity	More than 35% of expected revenue through 2030
Term	Five years by default, extended a year at a time	Typically five years; some customers ask for longer	Some run to 2031
Price	Floor on commodity memory (level undisclosed), negotiated quarterly; HBM priced annually; 2027 HBM agreed at target prices	Market-linked within an agreed range; a ceiling is not mentioned	Fixed, or with upper and lower bounds, for about three-quarters of agreement revenue
Volume commitment	Half-year note: order value and delivery period may change	Half-year report: volume and price set monthly and quarterly; no LTA order backlog	Take-or-pay on all agreements
Cash collateral	Contract liabilities up ₩9.61tn in six months, to ₩23.59tn	Deposits said to exist, amount undisclosed; ₩0.57tn of contract liabilities and advances	$12.75bn of customer deposits received
Grade	B	B	Closest to A

For Samsung and SK hynix, the honest answer to the question is that we do not know yet. Neither has disclosed a floor level, a minimum purchase obligation or a penalty. Sources: Samsung half-year review report, Samsung Q3 2026 IR presentation, Newsis on Samsung’s call, SK hynix half-year report, SK hynix Q3 release, Micron fiscal Q4 2026 prepared remarks.

The calls talk about volume. The filings talk about flexibility.

SK hynix’s “effectively sold out through 2029” was said on the call. The Asia Business Daily reported the basis: LTA volume already secured plus demand under concrete discussion. Digital Daily quoted the company’s head of DRAM marketing describing HBM over the next three years, a narrower scope. Asia Business Daily, Digital Daily. Either way, the statement describes visibility. It is not a disclosure of signed volume at fixed prices.

A correction to our earlier post. In our October 29 article on SK hynix’s results, we wrote that we could not find “sold out through 2029” in the published results materials and treated it as unconfirmed. That was accurate for the written materials. Several Korean reports of the call now confirm the statement, on the basis described above.

The filings are more precise. SK hynix’s half-year report, filed in English with the US SEC, says the company sets supply volumes and prices monthly and quarterly by mutual agreement with major customers, and that there is “no order backlog based on long term supply contracts.” Samsung’s half-year note on multi-year contracts says the total order value, the delivery period and other terms may change depending on customer demand and business progress.

The calls added detail on both sides. SK hynix’s CFO said deposits and other practical enforcement mechanisms exist, without giving an amount. He also said 2027 HBM volumes and prices have been agreed, and that the profit gap between HBM and commodity DRAM has narrowed meaningfully. Newspim. SK hynix said it will keep its LTA share at roughly 50% or more over the medium term and manage the rest of its capacity flexibly.

None of this is contradictory. The call statements are about how much demand the companies can see. The filings are about what the buyer is legally bound to take. A market that prices memory makers at a few times next year’s earnings is paying attention to the second.

Buyers disclosed the same flexibility from the other side

If the suppliers’ filings leave room to move, the buyers’ filings should show the same room. They do.

Buyer	Commitments in filings	What the filing or call says about flexibility	Collateral disclosed
Alphabet	$707.0bn of fixed or guaranteed commitments beyond one year at June 30, the significant majority LTAs, generally fulfilled through 2030. Total purchase commitments $811.0bn, up from $149.1bn at end-2025	CFO on the Q3 call: $924bn is the maximum contractual obligation; many contracts allow price and volume flexibility, so spending could be lower	None disclosed
Meta	$454.52bn of non-cancelable commitments at Sept 30, up from $349.31bn at June 30. $121.41bn due in 2027, up from $81.65bn	For agreements with variable terms, Meta does not estimate obligations beyond minimum quantities or pricing	$10.80bn of money market funds in escrow, released 2028–30; $1.53bn of unused letters of credit
Microsoft	$194.06bn of purchase commitments at June 30, 87% due within fiscal 2027, including take-or-pay	Higher memory and storage prices are built into its capex plan	$12.6bn of investments restricted under a supplier agreement; $35.7bn of receivables from facilitating server-component purchases

The suppliers wrote that terms may change. The buyers wrote that they may spend less than the headline. When both sides of a contract disclose the same flexibility, a downturn does not have to break the contract to reach the supplier’s profit. It arrives as deferred volume and as prices drifting to the bottom of the agreed range.

Two caveats apply. Buyer commitments include GPUs, TPUs, networking, power and data-center construction; the memory share is not disclosed, and we did not estimate it. None of the three buyers names its memory suppliers. Sources: Alphabet Q2 10-Q, Alphabet Q3 call transcript, Meta Q3 10-Q, Microsoft FQ1 2027 10-Q, Microsoft FY2026 10-K.

Some of the collateral sits on the buyer’s balance sheet

A supplier deposit is usually pictured as cash the buyer hands over. The filings show a second structure: the buyer locks up its own assets as security and keeps them on its own balance sheet.

Samsung’s collateral is visible. Its contract liabilities rose from ₩13.98 trillion at the end of 2025 to ₩23.59 trillion at June 30, an increase of ₩9.61 trillion, or 68.8%. That is a change against the year-end balance, not a year-on-year change, as some reports described it. In the same period Samsung said it had written substantial deposit-like advances into its contracts. Not all of the balance is memory LTAs, since other businesses also carry contract liabilities. Other non-current liabilities rose from ₩7.95 trillion to ₩24.47 trillion over the same six months, but Samsung does not say where LTA deposits are booked, so we do not add the two accounts.

SK hynix’s collateral is barely visible. Contract liabilities were ₩0.52 trillion at June 30 and advances received ₩0.05 trillion, ₩0.57 trillion together. That is 2.4% of Samsung’s contract liabilities. Either the deposits had not been received by June 30, or they sit outside the balance sheet. A Korean report in August said the deposits are held in a third-party trust. The company has not confirmed that. MTN.

Meta and Microsoft keep the collateral themselves. Meta reclassified $10.80 billion of money market funds as restricted cash for escrow under multi-year infrastructure purchase agreements, to be released between 2028 and 2030 as it meets the purchase obligations. Microsoft’s investments restricted under a supplier agreement rose from $11.3 billion to $12.6 billion in the quarter, and its receivables from helping buy server components rose from $27.8 billion to $35.7 billion. With this structure, the supplier gets assurance that the buyer will perform, but not cash. It matches what SK hynix’s balance sheet shows. The link to memory makers is still unconfirmed, because neither buyer names the supplier.

Samsung’s summary third-quarter balance sheet shows other liabilities falling from ₩52.15 trillion to ₩48.63 trillion, and deferred revenue and other advances from ₩4.47 trillion to ₩3.81 trillion. The composition is not disclosed, so we do not read it as falling LTA deposits. The full quarterly report, due around November 13–16, will show contract liabilities at September 30.

2027 is protected by the shortage, not by the paperwork

In a shortage, even a B-grade contract behaves like an A-grade one. SK hynix says customers are asking for more than twice the HBM it can supply, and Samsung says its sellable 2027 HBM volume is already committed. A buyer that walks away from its contract now must buy at spot prices or from another supplier, and pay more.

The buyers are also signalling that they intend to take the volume. Meta’s commitments due in 2027 rose by $39.8 billion in one quarter, or 49%. Microsoft built higher memory and storage prices into its capex plan. Alphabet’s commitments under supply agreements run to 2030.

What would break this: a customer asking to defer 2027 volume, or spot prices falling below contract prices during 2027. Neither has been reported.

After 2028, the flexibility clauses decide

Once new fabs arrive, the shortage stops enforcing the contracts, and only two terms are left to protect profit: the price floor and the minimum volume. Neither company has disclosed either. That is why a view on 2029 earnings cannot yet be proved from the contracts, and why we do not use the LTAs to argue that the market’s discount to post-2028 earnings is too steep.

SK hynix’s 50% rule cuts both ways. Keeping about half of its capacity outside LTAs leaves room to earn more if the shortage lasts. If supply overtakes demand, that half is exposed to spot prices. If the contracted half also has a ceiling, SK hynix gives up some upside in a boom. The company has not said whether one exists.

One early signal is worth watching. SK hynix said some customers may move HBM from 12-high to 8-high stacks and offset the lost capacity with higher capacity per die. The company frames this as a response to the shortage and says it is already in its supply plan, so we do not treat it as a sign of weakening demand. Still, a change in what buyers specify is the kind of adjustment that would come first if they start economizing.

If credit tightens, which is our credit-squeeze case, the first thing to bend would be whether buyers use the flexibility they disclosed. Microsoft’s commitments are mostly due within a year. Alphabet’s run to 2030. Meta’s escrow is tied to 2028–30.

Samsung versus SK hynix: different strengths, no winner

We do not rank the two on contract quality. Samsung leads on visible collateral: ₩9.61 trillion of new contract liabilities in six months is the clearest sign of cash changing hands at either company. SK hynix leads on specificity: it has named the share of 2027–28 capacity under contract and described its price mechanism.

The bigger difference is cyclical exposure. SK hynix keeps about half its capacity outside LTAs by design. That makes its earnings more sensitive in both directions. Which company is better protected in a downturn can only be decided once the floor levels and penalty terms are public.

Our judgment, and what would change it

The LTAs make 2027 delivery highly likely and leave the size of post-2028 downside unknown. Our scenario weights are unchanged: S1 rebound 50%, S2 credit squeeze 15%, S3 demand slowdown 15%, S4 macro shock 20%. These are our subjective estimates; the rebound case sets out what would confirm the first. The price-floor level and HBM4 pricing per gigabyte remain undisclosed.

The next readings are close. The probabilities below are our subjective estimates.

When (KST)	What to read	Base case	What would change the view
Oct 30–31	Alphabet Q3 10-Q, commitments note	Fixed or guaranteed commitments of $707bn or more (80%)	Flexibility language written into the note itself would move it from a call remark into a filing
Around Nov 13–16	Samsung Q3 quarterly report: contract liabilities at Sept 30	₩20–27tn (55%); above ₩27tn (25%); below ₩20tn (20%)	Below ₩20tn would mean falling advances, a weakening LTA signal; above ₩27tn would mean more collateral
Around Nov 13–16	SK hynix Q3 quarterly report: order status	“No LTA order backlog” unchanged (85%)	A disclosed backlog or deposit amount would lift its contract quality within grade B
Mid-December	Micron fiscal Q1 2027: contract backlog and deposits	Backlog near $150bn holds (70%)	A lower backlog or changed deposit-return terms would signal weaker contract quality across the industry
Late January 2027	Samsung and SK hynix Q4 calls	Floor level, HBM4 price per gigabyte and deposit amount stay undisclosed (85%)	Any of the three in numbers would let us size the downside protection

Which number would make you treat these contracts as a floor under profit: the price-floor level, a take-or-pay clause, or the deposit amount? Tell us what you would need to see.

Research and information only; not investment advice. Estimates and scenarios are analytical assumptions, not company guidance, trade instructions or personalized portfolio decisions. Figures are date-bound. AI tools assisted research and editing.

Interest disclosure: We use AI models, including Anthropic’s Claude, in our research. Alphabet is an investor in Anthropic and one of its cloud providers, and some Microsoft Copilot features use Anthropic models. Only public disclosures are cited; no assessment is made of the effect on either company.

SK Hynix's 80% Margin Answers 2027. Its Contract Price Band Will Answer 2029.

Thu, 29 Oct 2026 00:30:00 +0900

SK hynix reported ₩83.3 trillion of operating profit on ₩104.6 trillion of revenue for the third quarter. That is an operating margin of 80%. At average quarterly exchange rates, the profit is roughly $59 billion, about nine-tenths of the $64.0 billion non-GAAP operating income Nvidia reported for its quarter ended in July.

The stock closed at ₩1,487,000 on October 28. It rose 10.9% that day, but it is still 49% below its June 22 close of ₩2,919,000. Over the same months, quarterly operating profit rose from ₩60.5 trillion to ₩83.3 trillion. On the 2027 consensus, the shares trade at about 3.2 times expected earnings.

That gap is the real question. The market is not doubting 2027. It is pricing a steep fall in profit after 2028. The most important line in the release was therefore not the profit. It was this: long-term agreements with 14 major customers now cover more than half of 2027 and 2028 production capacity, at prices set “within a price range agreed upon with customers.”

Our judgment: the contract disclosure makes a 2027–28 earnings collapse unlikely, and the 3x multiple already prices a harsh fall after that. Whether that fall is too harsh depends on one undisclosed variable, the floor of the price band. This article explains why the floor dominates, what would show it is real, and what would prove the skeptics right.

This article is dated October 29, 2026, before Samsung Electronics’ 10 a.m. KST earnings call. Korean prices are KRX regular-session closes, not after-hours trades. Naver Finance daily charts include after-hours trades and can show different numbers, such as ₩1,508,000 for October 28. SK hynix’s Q3 figures are preliminary and unaudited.

Five things to take away

The profit is real, and in dollars it grew faster. Operating profit rose 38% in won terms from Q2. The won strengthened during the quarter, so in dollars the increase was about 46%.
Net income fell 58%, but memory did not. Q2 net income included ₩53.24 trillion of valuation gains on financial instruments. Kioxia’s share price fell about 40% in Q3. Screens built on net income will misread this company in both directions.
More than half of 2027–28 capacity is contracted, with a price band. The company did not disclose the floor, the band width, minimum purchase terms or coverage after 2028. Those details decide whether the contracts protect profit or only reserve volume.
SK hynix is also building the supply that will test the band. Investment will “increase significantly” next year as the Yongin Phase 1 fab starts full operation. The company forecasts a shortage through 2030. That is a forecast, not a contract.
The ₩100 trillion payout is a plan; ₩24 trillion of new shareholder returns was approved this week. The “₩210 trillion” headline adds the top of Samsung’s existing plan range to SK hynix’s plan. The recurring signal is the promise to buy back shares every quarter.

The quarter was real, and in dollars it was bigger

The question here is simple: did the business actually improve, or did accounting and currency flatter it? The operating line answers it.

Quarter	Revenue (₩tn)	Operating profit (₩tn)	Operating margin	Approx. operating profit ($bn)
Q3 2025	24.45	11.38	47%	8.2
Q4 2025	32.83	19.17	58%	13.2
Q1 2026	52.58	37.61	72%	25.7
Q2 2026	79.32	60.54	76%	40.3
Q3 2026	104.62	83.33	80%	58.8

Revenue rose 32% and operating profit 38% from Q2. Dollar figures use the average of daily USD/KRW quotes for each quarter (about 1,501 in Q2 and 1,417 in Q3). They are our approximation, not company figures. The won strengthened about 6% between the two quarterly averages, so the dollar growth was larger than the won growth. SK hynix Q3 release, Q2 release, Q1 release, USD/KRW history.

The company attributed the quarter to higher prices for key products, strong server DDR5 sales and the start of volume HBM4 shipments. It expects HBM4 to pass HBM3E in both shipments and revenue in the fourth quarter. Cash and equivalents reached ₩114.5 trillion, borrowings fell to ₩15.8 trillion and net cash rose to ₩98.7 trillion.

The Nvidia comparison needs two caveats. Nvidia’s figure is non-GAAP and covers May–July; SK hynix’s is K-IFRS and covers July–September. The point is scale, not a like-for-like ranking. A memory maker now earns operating profit in the same order of magnitude as the company that buys much of its HBM. Nvidia Q2 FY2027 results.

Net income fell 58% because of Kioxia, not memory

Third-quarter net income was ₩39.8 trillion, down 58% from ₩93.9 trillion in Q2. Anyone screening on trailing earnings will see a collapse. The operating business shows the opposite.

The Q2 figure was inflated. SK hynix’s half-year report shows ₩53.24 trillion of valuation gains on financial instruments in that quarter, largely linked to its Kioxia investment. We discussed that in our October 25 fair P/E analysis. In Q3 the move reversed. Kioxia’s shares fell from about ¥29,900 on June 30 to ¥18,095 on September 30, a drop of about 40%. Kioxia price history.

The release does not itemize the gap between operating profit and net income. Before the release, our estimate of the Q3 valuation loss on SK hynix’s remaining Kioxia-linked convertible bond was ₩20–25 trillion. That estimate scales the bond’s book value by Kioxia’s share price and ignores currency and contract terms. The reported net income is consistent with a loss of that size after tax, but the company has not confirmed the figure.

The same effect may repeat. Kioxia closed at ¥12,605 on October 27, about 30% below its September 30 level. If it stays near there, the same rough method points to a further non-cash loss of roughly ₩9–12 trillion in Q4. For this company, operating profit is the cleaner measure of the memory business. Net income will swing with a Japanese stock price.

The market is not pricing 2027. It is pricing what comes after

At ₩1,487,000 and a 2027 consensus EPS of ₩470,589, SK hynix trades at 3.16 times expected 2027 earnings. On October 23 the same calculation gave 2.81 times. Since then the price has risen 16.4%, while the 2027 EPS estimate has risen 3.7%. Consensus is the Naver/WiseReport figure collected on October 28; some analysts may not yet reflect the release.

Another way to see it: the market value at the regular-session close was about ₩1,086 trillion. Subtracting ₩98.7 trillion of net cash leaves an enterprise value of roughly three times the Q3 operating profit annualized. Annualizing one quarter is not a forecast. It shows how little the price assumes about profit lasting.

In our October 25 analysis, the price implied that SK hynix’s normalized earnings would fall to about 18% of the 2027 level. That is the bet the market is making. It is a bet on price, not on volume. Few investors doubt that SK hynix will sell its 2027 output. The doubt is what that output will be worth once new fabs arrive.

October 28 also brought a broad rally. The KOSPI closed at 6,012.44, up 6.63%, and the exchange triggered a buy-side “sidecar” pause for the second day in a row. KOSPI data, sidecar report. A sidecar is a temporary halt on program orders after a sharp futures move. It does not identify who was buying. The public data we could verify do not yet show whether foreign investors were covering futures shorts. We treat the rally as price evidence, not as proof that selling has ended. Our rebound case from October 24 set out the conditions that would confirm it.

What the contracts say, and what they leave out

The release makes four specific claims about long-term agreements (LTAs):

SK hynix has signed LTAs with 14 major customers, including leading global cloud providers.
Contract terms are typically five years, and the company is discussing longer terms with several customers.
Contracted volume equals more than 50% of total production capacity for 2027 and 2028.
Prices reflect market conditions within a price range agreed with customers.

The fourth point is the one that matters for valuation. Volume certainty was never the bear case. A price range turns part of memory pricing from a spot market into a corridor. In a shortage, the ceiling costs SK hynix some upside. In a glut, the floor protects it. Which side matters more depends on where the corridor sits.

Question	Disclosed on October 28	Not disclosed
How much volume is contracted?	More than 50% of 2027 and 2028 capacity	Coverage for 2029 and later
How many customers?	14 major customers	Customer concentration and the HBM share of contracted volume
How is price set?	Market-linked, within an agreed range	Floor level, band width, reset frequency
What binds the buyer?	Not described	Minimum purchase, take-or-pay, prepayments, cancellation terms
How long?	Typically five years	Start dates; contracts signed in 2026–27 would run to about 2031–32

A brokerage commentary on October 28 said SK hynix had sold DRAM and HBM output through 2029. We could not find that statement in the published results materials. Correction, October 29: Korean press reports of the earnings call confirm that SK hynix described DRAM and HBM as effectively sold out through 2029. The basis it gave was LTA volume already secured plus demand under concrete discussion, so the statement describes how much demand the company can see, not signed volume at fixed prices. Coverage for 2029 and later is still not disclosed. An earlier version of this article treated the statement as unconfirmed. Asia Business Daily, our follow-up on contract quality.

Other evidence points the same way, with lower certainty. On October 27, Maeil Business Newspaper reported that Alibaba, Tencent and ByteDance had asked Samsung and SK hynix for long-term server DRAM supply, with some requests running up to ten years, to 2035. Maeil Business report. That is a report of a request, not a signed contract. US export rules restrict HBM sales to China, and some conventional DRAM may also need licenses depending on specifications and end use. KB Securities separately estimates that 70–80% of both companies’ planned 2027 memory volume is covered by five-year LTAs. That is a broker estimate, not company data. KB Securities, October 26.

TrendForce’s public summary of its October 7 DRAM bulletin describes the same structure: multi-year server DRAM contracts, with price-band mechanisms on many of those volumes and the remainder priced quarterly. TrendForce DRAM bulletin. When buyers ask for ten-year terms, they are telling you which side of the band they fear. They fear paying more, not being stuck with too much.

SK hynix is also building the supply that will test the band

The release says investment will “increase significantly” next year. Yongin Phase 1 enters full-scale operation, and the M15X fab will run at maximum capacity by the end of 2026 to raise HBM4 output. The company adds that it will adjust the scale and timing of investment flexibly.

This is the honest tension in the story. The company that forecasts a shortage through 2030 is also adding capacity, and so are its competitors. The shortage claim rests on the difficulty of leading-edge processes and long fab lead times. That is a reasonable argument, but it is the company’s forecast.

Independent forecasts support the near term. TrendForce expects memory supply to stay tight through 2027 and projects a 121% rise in blended HBM prices in 2027, driven by supply limits, more HBM4 and the start of HBM4E. It also notes that GPU and ASIC makers are considering 8-high HBM stacks to save cost; those carry a 10–20% higher price per gigabit than 12-high stacks. TrendForce, September 29. None of this extends to 2029.

So the band floor and the supply response are linked. If new supply arrives in 2028–30 and spot prices fall, the floor is what protects contracted volume. If the floor is close to today’s contract prices and the buyer must take the volume, the market’s 18% normalization looks too harsh for the contracted half. If the band is wide or resets each year, the contracts mostly guarantee shipments, and the skeptics are right to apply a cyclical multiple.

The payout: ₩100 trillion is a plan; ₩24 trillion was approved this week

A Korean newspaper headline on October 27 put Samsung’s and SK hynix’s combined shareholder returns at “₩210 trillion or more.” The number adds different things. Here is what SK hynix actually said on October 28. SK hynix Q3 release, Hankyung report.

Item	Amount	Status
FY2026 shareholder return plan	About ₩100tn	Plan: cash dividends of ₩30tn or more, plus buybacks and cancellations of ₩60tn or more
August buyback	₩40tn	Completed last week; shares to be cancelled shortly. Counted inside the ₩60tn
Q3 cash dividend	₩14tn	Approved October 28: ₩20,000 per share, half regular and half a special dividend from Kioxia gains
New buyback for cancellation	₩10tn	Approved October 28; counted as a shareholder return
New buyback for employee pay	About ₩10tn	Approved October 28; excluded from the return total

The ₩24 trillion of new shareholder returns approved this week is the ₩14 trillion dividend plus the ₩10 trillion buyback for cancellation. To reach its own floors by year-end, the company still has to pay more dividends and buy back at least another ₩10 trillion for cancellation. The release does not say how much of the dividend floor was already paid earlier in the year.

For market flows, both new buybacks matter, because both buy shares in the market. For per-share value, only the cancelled ₩10 trillion counts. The release does not give an execution period, so the daily buying pressure is unknown.

On the Samsung side of the headline, the ₩110 trillion is the top of the ₩90–110 trillion range Samsung announced on August 21. It is not a new increase. Samsung plans to set dividend details at its October board meeting and the remaining return at a January 2027 board meeting. Samsung Electronics, August 21.

The special dividend is a one-off; it returns an investment gain. The more telling line is the stated principle that buybacks “will continue every quarter.” A management team that expected a 2027 cash cliff would be unlikely to promise that. It is a principle, not an amount, so it supports the 2027–28 view and says nothing about 2029.

Our judgment, and what would change it

We side with the contracts for 2027–28 and with the skeptics for 2029–30, until the floor is disclosed. The Q3 release lowers the risk of a near-term earnings collapse more than a 3x multiple implies. It does not yet justify valuing post-2028 profit as if it were contracted.

Three variables decide the case. The band floor dominates, because it is the only one that directly limits how far contracted profit can fall. Supply response comes second; it decides when the floor is tested. Customer returns on AI spending come third; they decide whether buyers want to renegotiate.

Evidence	What it would mean
SK hynix, Samsung or Micron says the floor sits near current contract prices, with minimum purchase or prepayment terms	The market’s normalization assumption looks too harsh for contracted volume; the discount to 2027 earnings should narrow
LTA coverage is disclosed for 2029–30 at levels near the 2027–28 share	The “2027 answered, 2029 open” framing would need revision toward durability
Bands are described as wide, reset annually, or tied to spot prices	The contracts mainly secure volume; a cyclical multiple remains justified
Industry capex guidance for 2027 rises faster than expected bit demand	The floor will be tested sooner, around 2028
Hyperscaler capex guidance is cut, or buyers seek to defer LTA volume	Renegotiation risk rises; the contract floor matters more than the headline coverage

The next checks are close. Samsung Electronics holds its earnings call at 10 a.m. KST on October 29; the useful question is whether it describes its own LTA pricing terms, not only the dividend. Microsoft reports after the US close on October 28, early on October 29 in Korea, and third-party calendars place Alphabet and Amazon in the same window; Meta reported on October 21. Their capex and lease guidance shapes buyer behavior in 2027. Kioxia’s share price will decide how SK hynix’s Q4 net income looks.

Which disclosure would change your view most: the level of the LTA price floor, the contracted share of 2029–30 capacity, or the industry’s 2027 capex plan? Tell us what number would convince you.