A power struggle between two of China’s most strategically important technology companies is the clearest signal yet that Beijing’s decade-long semiconductor investment drive has fundamentally reordered the global memory chip industry.
The Context
Memory chips — the DRAM modules found in every smartphone, laptop, and server rack — were for most of the past two decades an unglamorous, low-margin commodity dominated by South Korean conglomerates Samsung and SK Hynix, with U.S.-based Micron as the main Western counterweight. Chinese manufacturers lagged years behind in process technology and depended heavily on state subsidies and foreign equipment to close the gap. ChangXin Memory Technologies (CXMT), founded in 2016 and headquartered in Hefei, Anhui province, and its flash-memory counterpart Yangtze Memory Technologies Corp (YMTC), based in Wuhan, Hubei province, spent years absorbing losses while accumulating manufacturing expertise.
That era is over. The explosion of AI data center construction — requiring vast quantities of high-bandwidth memory and server DRAM — has transformed the economics of the industry overnight. Demand has outpaced supply across the board, giving producers pricing power they have never previously enjoyed. For Chinese memory makers, the timing has proved fortuitous: they have arrived at scale precisely as the market has turned in their favor. As the broader US-China AI race has intensified, the memory chip battleground has become one of its most consequential theatres.
The Move
The incident that crystallized the new dynamic came in June at CXMT’s Hefei factory. According to two people familiar with the matter, cited by Reuters, CXMT had been raising prices on Huawei — one of China’s largest technology buyers — for months, and had refused to provide relief when Huawei pushed back. The confrontation came to a head when CXMT abruptly ordered engineers from SiCarrier, a chipmaking-equipment vendor with close ties to Huawei, to leave its R&D cleanrooms immediately. Executives at SiCarrier concluded the expulsion was a direct consequence of the pricing standoff. The engineers have not been permitted back into the R&D zone, though the companies reportedly continue to do business. CXMT, Huawei, and SiCarrier did not respond to Reuters’ requests for comment.
The financial backdrop to that confrontation is striking. CXMT reported $7.5 billion in revenue for the first quarter alone — a 719 percent increase year-on-year — erasing a decade of accumulated losses within six months. The company listed on the Shanghai stock exchange this month following an $8.6 billion IPO. In June, CXMT signed a five-year supply agreement with ByteDance, TikTok’s Chinese parent, worth more than $7 billion, according to three people familiar with the deal, as reported by Reuters. That followed an agreement with Tencent, also in June, valued at more than $3 billion. ByteDance and Tencent did not respond to comment requests.
YMTC, meanwhile, entered the South Korean consumer memory market in June, moving directly into territory vacated by Samsung, SK Hynix, and Micron as those companies shifted focus toward more advanced chips. YMTC’s leadership is reportedly targeting a 1 trillion yuan ($148 billion) valuation for its forthcoming IPO.
The near-simultaneous entry of both CXMT and YMTC into high-value supply agreements with China’s largest tech platforms — ByteDance, Tencent — while also expanding into overseas markets is not coincidental timing. It suggests a coordinated pivot by both companies from a domestic-subsidy-dependent posture to a commercially aggressive one, using AI-driven demand as the moment to establish long-term customer lock-in before Western sanctions can constrain their growth. The $10 billion-plus in platform deals, combined with public listings, effectively transforms both firms from state instruments into capital-market actors with their own growth imperatives — a shift that will make future government direction considerably more complicated.
The Stakeholders
CXMT: From Loss-Maker to Price-Setter
CXMT is now the world’s fourth-largest DRAM producer and, according to six people cited by Reuters, is in some cases charging more than Samsung’s approximately $1,240-per-unit price for comparable 64-gigabyte DDR5 server memory modules. The company has also produced its own high-bandwidth memory, the ultrafast format most critical for AI workloads. Five sources told Reuters it remains roughly two generations — or several years — behind leading rivals, but the very existence of a domestic HBM product matters enormously to Chinese AI infrastructure buyers locked out of the global supply chain by geopolitical friction. CXMT is currently building two new plants in Shanghai and Hefei and is in discussions about a third, moves that would more than double capacity to over 600,000 wafers per month. One source told Reuters that CXMT’s capacity could overtake Micron’s by 2030 if those plans proceed.
YMTC: Entity-Listed, Still Expanding
YMTC has operated under U.S. Entity List restrictions since 2022, which has forced a different trajectory. According to two people familiar with its operations, the company has replaced roughly half its equipment with domestically produced machinery and developed new techniques for stacking memory layers with less-advanced tooling. That enforced self-reliance has made it somewhat more insulated from future Western export controls than CXMT. Reuters reported in April that YMTC plans two additional factories on top of one due to be completed this year. Chairman Chen Nanxiang told Chinese state media in 2024 that explosive growth would come “within three to five years.” By early 2025, according to two sources, his leadership team was celebrating: the boom had arrived ahead of schedule.
Huawei and the Domestic Buyers
The friction between CXMT and Huawei illustrates a tension that runs through China’s entire technology supply chain. Beijing has pushed state-owned enterprises to source domestically and restricted them from buying foreign memory chips, but domestic demand is now intense enough that Chinese chipmakers can exercise pricing power over even their most powerful domestic customers. Several Chinese electronics companies complained to China’s Ministry of Industry and Information Technology this year about price increases by both CXMT and YMTC, blaming higher costs for delays to product launches, according to two people. The ministry said in April it would crack down on chip hoarding aimed at driving up prices — a response that signals official discomfort even as it publicly champions the companies as strategic assets. Enterprise technology buyers globally are already battling AI infrastructure cost pressures, and Chinese firms are discovering they are not exempt.
