Micron Technology NASDAQ:MU signed a long-term Strategic Customer Agreement with General Motors NYSE:GM, expanding the memory maker's push to lock in revenue through multi-year supply deals.
The agreement will supply GM with memory and storage platforms used in vehicle production. It is one of 16 SCAs Micron highlighted on its fiscal Q3 call, where management said these agreements now cover about 40% of the business and could eventually reach 50%.
Micron executive Sumit Sadana said the agreements are non-cancelable and structured as take-or-pay deals, meaning customers are obligated to pay for committed volume whether they use the supply or not. Most non-auto agreements run for 5 years, with annual volume commitments.
The GM deal is supported partly by Micron's U.S. manufacturing investments, including $2 billion for an advanced DRAM fab in Manassas, Virginia, which entered production this year.