General Motors has signed a long-term agreement (LTA) with Micron covering the supply of DRAM and NAND chips.
GM needs the chips for its next-generation vehicles which will feature AI-enabled in-cabin experiences and advanced driver assistance (ADAS) autonomy. The Micron and GM agreement ensures Micron’s supply of LPDRAM, NOR and UFS NAND products to GM.
Mary Barra, CM Chair and CEO, said: “Delivering next-generation vehicles at scale requires a resilient and closely aligned supply chain. Our expanded collaboration with Micron strengthens our access to critical memory technologies while enabling deeper integration across our vehicle platforms, supporting both performance and long-term reliability. This agreement reinforces the supply chain needed to support future vehicle innovation and production.”
GM gets predictable semiconductor product supply and pricing from Micron while Micron can plan its production schedules better and gains more reliable revenue streams. Micron says that, by aligning long-term demand with committed capacity and engineering collaboration, it’s improving planning visibility and reducing supply variability.
Sanjay Mehrotra, Micron’s Chairman, President and CEO, said: “As demand for memory and storage continues to grow, we are investing to extend supply availability, expand capacity and align more closely with our customers to improve supply predictability across the automotive ecosystem. Our expanding manufacturing efforts in the United States are designed to enable GM to deliver both near-term products as well as secure U.S.-based supply to support next generation platforms and innovation.”
The US manufacturing point refers to Micron’s $2 billion investment to modernize its Manassas DRAM fab, which began production earlier this year. Micron says it’s helping ensure that critical industries, including automotive, have reliable access to the memory and storage technologies required to operate and innovate at scale. It’s also helping to ensure its revenues and gross margin stay high and avoid the boom-and-bust cycle of previous memory and NAND manufacturing cycles.
Micron and GM said that they will collaborate on next-generation vehicle memory and storage requirements, including product definition, system-level optimization, and future Micron product qualification by GM.
According to Korean analyst Jukan of Citrini Reseach, Micron long-term agreements, like Samsung’s, contain both a price floor and a price ceiling, plus “collecting a portion of annual revenue upfront as advance payments … The advance payment is a binding condition that prevents arbitrary volume changes after the contract is signed. …. Micron's advance payment is presumed to be structured as refundable upon maintenance of the contract rather than deducted from revenue.”
Such customer LTAs reduce the risk for memory and NAND manufacturers in building new fabs which take years and cost multiple billions of dollars.
He says “all five memory suppliers (Samsung, SK Hynix, Micron, Kioxia, SanDisk), and not a single supplier alone, are signing similar three to five year LTAs.” Micron has signed 16 such agreements as the previous commodity status of DRAM changes to being a critical supply chain component for upstream industries needing chips for AI processing - GPU server suppliers - smart and AI-enabled products.
We can expect more large-scale vehicle manufacturers to sign similar agreements with DRAM and NAND suppliers.