Micron Technology (MU, Financials) has signed a long-term Strategic Customer Agreement with General Motors (GM, Financials), giving the automaker a dedicated supply of memory and storage products while strengthening Micron's strategy of securing long-term customer commitments.
The agreement will support GM's current and future vehicle platforms, which require increasingly advanced memory and storage solutions as software, connectivity and driver-assistance features become more common. The companies did not disclose the financial terms of the deal.
The announcement comes just days after Micron told investors that Strategic Customer Agreements, or SCAs, have become a bigger part of its business. Management said the company now has 16 such agreements in place, accounting for about 40% of total revenue. That figure is expected to rise to roughly half of the business over time.
Unlike traditional supply contracts, Micron said most SCAs are structured as five-year take-or-pay agreements. Customers commit to annual purchase volumes and remain obligated to pay under the contract, giving Micron greater visibility into future demand.
Chief Executive Officer Sanjay Mehrotra said the agreement also reflects Micron's continued investment in U.S. manufacturing. The company recently began production at its advanced DRAM facility in Manassas, Virginia, following a $2 billion investment.