Kioxia in Talks for Long-Term Supply Deal as LTA Expands into NAND Flash

According to industry reports, Japanese NAND flash manufacturer Kioxia is in talks with a major cloud and virtual server provider to secure a three-year long-term agreement (LTA) extending through 2029. The move comes as the company’s production capacity for this year is already fully booked, with supply tightness expected to persist into next year.

The proposed LTA structure shifts traditional quarterly semiconductor supply contracts into multi-year agreements, allowing customers to lock in both volume and pricing in advance. While LTAs have historically been concentrated in high-bandwidth memory (HBM) and DRAM segments, they are now expanding into NAND flash as demand from AI and data center applications accelerates. Recent deals—including SK hynix’s DDR5 agreement with Microsoft and Micron Technology’s multi-year strategic contracts—underscore the growing adoption of long-term supply models across the memory market.

Earlier developments also highlight this trend. SanDisk confirmed it had finalized a NAND LTA with prepayment terms and extended its joint investment partnership with Kioxia’s Yokkaichi and Kitakami fabs in Japan through 2034, committing $1.165 billion to secure supply. The company also plans to invest over 1 trillion Korean won to support future demand growth. SanDisk CEO David Goeckeler noted that data center storage demand expectations have surged from 20% earlier in the year to over 60%. Meanwhile, Samsung Electronics and Solidigm are also expanding long-term contract volumes.

The storage ecosystem is seeing parallel momentum in the hard disk drive (HDD) segment. Western Digital has secured orders from seven hyperscale data center operators, including multiple LTAs extending to 2027–2028. Seagate Technology has also sold out its nearline HDD capacity for the year, with long-term agreements in place through 2027 and strong financial performance driven by rising demand.

Notably, NAND flash and HDD markets are forming a cyclical demand dynamic. Rapid growth in AI-driven storage needs is pushing up NAND prices, highlighting the cost advantage of HDDs—typically around one-tenth the cost of SSDs at equivalent capacity—which in turn boosts HDD demand. Conversely, HDD shortages can shift demand back to SSDs, creating a broader upcycle across the storage market.

Despite the robust outlook, NAND manufacturers remain cautious on capacity expansion. Kioxia plans to invest 400 billion yen in equipment this year, a 40% increase year-over-year but still below its 2023 spending level. Industry observers expect LTAs to become the dominant contract model over the next three to five years, improving revenue visibility and reducing earnings volatility.

However, concerns remain that the growing prevalence of LTAs could widen the gap between large and smaller buyers. Companies unable to secure long-term agreements may face increasing challenges in accessing stable supply amid ongoing market tightness.