Two-Thirds of Future Capacity Sold — Is Memory Becoming Less Cyclical?

Memory stocks surged Tuesday, but the more interesting story may be happening underneath the share prices.

$SanDisk Corp.(SNDK)$  

SanDisk says roughly two-thirds of its FY2028 bits are already covered by new business-model agreements.

That is significant because memory has historically been one of the most cyclical parts of semiconductors.

What changed?

SanDisk says its new agreements with eight customers cover approximately 50% of FY2027 bits and two-thirds of FY2028 bits. The contracts include committed volumes, minimum financial guarantees and pricing mechanisms. 

That gives SanDisk something memory companies traditionally haven’t had:

greater visibility into future demand and cash flow.

It doesn’t eliminate the memory cycle. But if more production is contracted before capacity comes online, the downside during a future downturn could look different from previous cycles.

But the bears haven’t disappeared  

Michael Burry disclosed that he increased his Micron short position, pointing to Acer’s warning that additional supply could eventually ease the current shortage. 

$Micron Technology(MU)$  

Micron also faces a potential labor dispute in Taiwan, an important production base for DRAM and HBM. Reuters reported that the union was preparing for possible strike action, although no strike had been called and production had not been affected at that point. 

So there are still legitimate questions around supply, pricing and how long today’s extraordinary margins can last.

The interesting part

Selling capacity years ahead can look like management is giving away future upside.

But there’s another way to see it:

If customers are willing to commit before the capacity exists, memory manufacturers gain visibility while customers secure supply.

The trade-off is straightforward.

More contracted capacity = less downside from demand shocks, but potentially less upside if spot prices later explode above contract economics.

That’s the debate investors should watch.

The memory bull case isn’t simply “AI demand is strong.”

It’s whether AI-driven demand + multi-year contracts + constrained supply can make this memory cycle structurally different from the boom-bust cycles investors are used to.

If that happens, the old way of valuing memory companies may need another look.