SAN FRANCISCO—Chipmaker Micron Technology Inc. on Thursday announced it was experimenting with a new pricing model for its chips called forward pricing agreements that would aim to stabilize the steep price fluctuations that plague the industry.
“I’m super excited to announce that a top 10 customer has already signed up on this model with us, a more than $500 million a year of revenue for a three year agreement,” said Sumit Sadana, Micron’s chief business officer at the company’s investor day event.
He declined to project how much of the long-term agreements with customers would migrate to this new model of pricing, and emphasized that this was an “experiment”. He said the current long-term agreements are based on volume and not on prices. The forward pricing agreements have both volume and pricing.
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