Elon Musk has praised Micron's approach to future memory pricing while criticizing the pricing of other suppliers. Benzinga reported on October 14, 2026 that Musk considers Micron's approach a wise move for building long-term customer relationships. With memory shortages continuing, what matters to buyers is not only today's unit price. Whether they can secure the volumes they need several years out, and whether they can predict their procurement costs, is also a major concern. The terms of long-term contracts that Micron disclosed at the end of September show what obligations customers take on in exchange for price caps.
Musk Praises Micron's Future Pricing
According to a post on X cited by Benzinga, Musk said Micron has been "reasonable" on future memory pricing, while criticizing other companies' pricing as outrageous. He also said customers will not forget how suppliers behave. His comments can be read as a suggestion that companies should consider future business relationships, not just current supply and demand.
However, the quoted remarks do not name the companies he criticized or give prices for specific products. There is no basis for concluding that he singled out Samsung Electronics or SK hynix, and no concrete figures were provided to compare how much cheaper Micron's prices are than its competitors'.
Praising pricing as "reasonable" also does not mean Micron has announced a price cut. Being comfortable with future prices is a separate matter from prices being lower than current market levels. How far prices could rise during a contract term, and whether the required volumes can be reliably secured, are the questions that matter. If those terms are clear, buyers can plan their medium- to long-term business more easily.
Long-Term Contracts With Price Caps and Floors, Plus Purchase Obligations
In its September 30 earnings remarks, Micron disclosed that it has signed 26 strategic customer agreements (SCAs). The company expects these agreements to account for more than 35% of its revenue through 2030. Customers can secure memory supply for several years, but they take on an obligation to take the contracted volumes or pay for them even if they do not.
How prices are set varies by contract, however. For about three-quarters of the revenue expected from SCAs, a pricing mechanism has been set in advance, and most of those have both a price cap and a price floor. For the remaining quarter or so, prices will be negotiated periodically in line with market trends. Note that this "three-quarters" refers to the share of expected SCA revenue, not the share of contracts or of Micron's overall production volume.
A price cap lets customers predict the maximum their procurement costs for the contracted products could rise. A price floor and purchase obligations, meanwhile, are conditions that let Micron secure a certain level of revenue even if demand falls. During periods of shortage, buyers are promised stable supply, and the risk from later market swings is shared by both sides. That is the structure that can be read from the disclosed contract terms.
Still, even with caps and floors, unit prices are not fixed for the contract term. Customers get different degrees of price predictability from a contract in which prices move within a range than from one in which prices are negotiated periodically. Micron itself says that in price negotiations for new SCAs, it is proposing higher prices than before, reflecting market conditions and its outlook.
Musk's praise for Micron and the company's pursuit of higher-priced contract negotiations are therefore not necessarily contradictory. If stable supply and price predictability are valuable enough, buyers may accept higher pricing. However, Micron's disclosure of overall SCA terms does not allow us to identify specific prices or purchase obligations for Tesla. It also remains unclear which contract terms Musk was praising.
Why $32 Billion Cannot Be Read as Total Contract Value
The $32 billion figure Micron disclosed on September 30 represents the amount customers have committed financially. It differs in meaning from the roughly $150 billion in remaining performance obligations (RPO) and the $12.7 billion in customer deposits the company held at quarter-end.
All of these numbers relate to the long-term contracts, but they represent, respectively, customers' financial commitments, the value of contracts yet to be fulfilled, and cash actually received and held. Based on page 3 ("Strategic customer agreements update"), page 6 ("RPO") and pages 8–9 ("Total cash/debt") of Micron's fiscal fourth-quarter 2026 earnings remarks, they break down as follows:
| Amount | What it represents | Scope and timing |
|---|---|---|
| $32 billion | Customers' financial commitments, mostly as cash deposits | The 26 SCAs signed as of September 30, plus contract extensions |
| About $150 billion | Remaining performance obligations (RPO): contract value based on remaining contracted volumes and minimum prices | Only SCAs with predetermined pricing mechanisms; figure as explained at September 30 |
| $12.7 billion | Cash deposits from customers recorded on the balance sheet | Balance at the end of fiscal Q4 2026 |
The figures cannot simply be added or subtracted to calculate total orders or amounts yet to be collected, because their scope, calculation methods and timing differ.
The roughly $150 billion in RPO should likewise not be taken as a direct forecast of future revenue. That figure is calculated on the minimum prices set in the contracts, and Micron expects actual revenue over the contract terms to be significantly higher. It also covers only contracts with predetermined pricing mechanisms, so it is not an assessment of all 26 SCAs on the same terms.
The cash received from customers also comes with conditions for repayment. According to Micron, if customers meet minimum purchase requirements, the cash is returned in stages in the later part of the contract term. There are no restrictions on how Micron uses the cash, and it is recorded in the cash flow statement under financing activities, so it does not affect the company's free cash flow. Interpreting $32 billion as already-confirmed revenue or as cash that never has to be returned would misread the nature of the contracts.
Customers can gain visibility into future supply because of these purchase obligations and financial commitments. For Micron, they make future demand easier to forecast and provide a basis for capital spending decisions. Judging whether memory pricing is reasonable requires considering not only unit prices but also the obligations and financial burdens customers take on.
Long-Term Contracts as a Bridge to Added Capacity
Micron forecasts that memory supply and demand in 2027 and 2028 will be even tighter than in 2026. In Idaho, it plans to begin wafer output at its ID1 fab in mid-2027 and at ID2 at the end of 2028, with initial production at a new fab in New York set to start in 2030. New fabs, however, need several quarters after their first output to ramp up capacity. Even with construction plans moving ahead, the current supply shortage cannot be resolved immediately.
Because of this lag before added capacity arrives, long-term contracts looking several years ahead carry meaning beyond current prices. Customers gain visibility on securing the memory they need, and Micron can proceed with capital investment based on demand backed by contracts. Micron itself says, however, that it cannot predict when memory supply and demand will return to balance.
Shay Boloor of Futurum Equities, cited by Benzinga, also points to the effect such contracts could have on future customer relationships. He sees the possibility that favorable views of Micron like Musk's could help it win long-term contracts and expand market share even after the shortage eases. That is a view on future developments, however, and it has not been shown that this will lead to customer retention or share gains.
Whether Musk's assessment translates into expanded long-term business is likely to become clear as capacity expands and contracts come up for renewal. If Micron continues to offer price caps and supply terms that customers find acceptable in new negotiations, and customers are able to meet their purchase obligations, Micron may be able to maintain stable relationships until its capacity expansion delivers real results.