HomeStockReminiscence chip maker Micron launches new pricing experiment for stability By Reuters

Reminiscence chip maker Micron launches new pricing experiment for stability By Reuters



© Reuters. FILE PHOTO: The brand of U.S. reminiscence chip maker MicronTechnology is pictured at their sales space at an industrial truthful in Frankfurt, Germany, July 14, 2015. REUTERS/Kai Pfaffenbach

By Jane Lanhee Lee and Chavi Mehta

SAN FRANCISCO (Reuters) – Chipmaker Micron Expertise Inc (NASDAQ:) on Thursday introduced it was experimenting with a brand new pricing mannequin for its chips known as ahead pricing agreements that might intention to stabilize the steep worth fluctuations that plague the business.

“I am tremendous excited to announce {that a} high 10 buyer has already signed up on this mannequin with us, a greater than $500 million a yr of income for a 3 yr settlement,” stated Sumit Sadana, Micron’s chief enterprise officer on the firm’s investor day occasion.

He declined to mission how a lot of the long-term agreements with prospects would migrate to this new mannequin of pricing, and emphasised that this was an “experiment”. He stated the present long-term agreements are primarily based on quantity and never on costs. The ahead pricing agreements have each quantity and pricing.

When requested about whether or not the contracts could be enforceable Sadana acknowledged that one get together or the opposite would at all times be on the flawed facet of the value.

Sadana additionally stated that Micron doesn’t plan to decrease its gross margins to push the ahead pricing agreements forward.

“There will be ups and downs, however the advantages finally outweigh the dangers of truly doing an settlement like this,” stated Sadana.

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