BlockBeats News, July 15th - According to sources familiar with the matter, the artificial intelligence cloud computing company Coreweave (CRWV.O) is exploring the use of financial derivatives as a potential hedge against future memory and storage chip price drops. This unusual move highlights how the AI boom is deeply tying cloud service providers to the volatile chip market.

To secure supply, cloud operators including CoreWeave have entered into long-term agreements with memory and storage chip manufacturers such as Micron and SanDisk. Many of these agreements provide suppliers with price downside protection for DRAM and storage chips. However, this arrangement is a double-edged sword, protecting chip manufacturers from the impact of market downturns but also exposing cloud service companies like CoreWeave to risks.

In the event of a price drop, they would be forced to continue purchasing at prices significantly above the market rate. Therefore, CoreWeave executives have held discussions on how to hedge against the risk of memory chip inventory devaluation due to future price declines. The discussions are in the early stages, and the company has not yet executed any hedging operations. Proposed solutions include put options and other potential derivative instruments.