CXMT Secures Massive DRAM Supply Agreement with Tencent to Strengthen Domestic Semiconductor Chains for Cloud Computing and AI Infrastructure
As reported by Reuters, Chinese chip maker ChangXin Memory Technologies also known as CXMT has entered into a huge supply agreement with Tencent Holdings worth more than 20 billion yuan approximately 2.94 billion dollars. This deal with the internet company is seen as a strategic move to establish a stable and reliable domestic supply chain of semiconductors for the increasing demand of cloud computing and artificial intelligence infrastructure.
The agreement is intended to last for three to five years and is centered around the purchase of memory chips known as DRAM or dynamic random access memory for cloud servers. Today cloud datacenters require astonishing amounts of DRAM to perform database functions and run complex workloads without creating data bottlenecks. The contract comes at a time of global memory shortage that has driven procurement costs to levels only recently seen for major tech companies and places volume commitments on long term contracts high on hyper scalers agendas.
This huge investment from Tencent lends the Hefei based chipmaker significant weight ahead of its IPO on the Shanghai STAR Market. CXMT secured approval to list for a fund raise of 29.5 billion yuan positioning it as one of the biggest Chinese mainland IPOs in recent history. Previously seen as a technology follower alongside established rivals like Samsung Electronics and SK Hynix, the company is now leveraging these major Chinese based collaborations to establish itself as the main provider of memory hardware in the region.
The technology supply chain in China is shifting to local manufacturing due to high costs and international trade restrictions. UBS investment bank reports that the market price of DRAM contract pricing increased by 95 percent quarter over quarter in early 2026 with the price cycle expected to last through late 2027. CXMT has capitalized on this environment and realized strong financial growth. Revenues for the first quarter reached 50.8 billion yuan representing a year on year increase of over 700 percent. Net profits were 25 billion yuan which is a significant recovery from previous losses.
In response to increasing demand, CXMT is building more manufacturing capacity. It operates three manufacturing facilities utilizing 12 inch wafers in both Hefei and Beijing providing a total capacity of around 300,000 wafers per month. According to industry reports, the company has started building a new DRAM plant in Shanghai which already hosts a high bandwidth memory packaging plant. When finished, the company looks to double its total capacity to 600,000 wafers per month.
Although the expansion in physical capacity was extremely fast, CXMT still encountered technical issues which keep domestic manufacturers behind worldwide competitors. Industry reports indicate that CXMT encountered low production yield in next generation DDR5 memory chips during early 2026. As DDR5 remains the standard for high performance server applications, achieving a stable production yield will be essential for CXMT to reduce reliance on foreign imports and ensure further business growth.
