The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

By Robyn Mak

HONG KONG, July 7 (Reuters Breakingviews) - Samsung and SK Hynix are turning to multi-year contracts to protect earnings in the cyclical chip market. It's prudent given their $2 trln spending plans and warnings of faltering AI demand. But such agreements are only truly effective if they cover longer periods and more sales.

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CONTEXT NEWS

Samsung Electronics on July 7 forecast operating profit for the second quarter to be 89.4 trillion won ($58.47 billion), up from 4.68 trillion won a year ago. Revenue would probably rise 129% to 171 trillion won from a year earlier, it said.

The company separately announced on June 29 it would invest 2,100 trillion won ($1.38 trillion) in its semiconductor business through 2040 but said spending would be adjusted to market conditions and business needs. Rival SK Hynix also announced a 1,100 trillion won "mid-to-long term investment strategy".