Inside China's Memory Shift: How CXMT and YMTC Are Altering Semiconductor Supply

 

Global data center expansion for artificial intelligence applications has increased demand for memory components, allowing Chinese state-supported manufacturers ChangXin Memory Technologies (CXMT) and Yangtze Memory Technologies Corp (YMTC) to raise prices and secure multibillion-dollar agreements.

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For years, memory components—the essential chips used to store files and run software in laptops, smartphones, and servers—operated as low-margin commodities. Chinese manufacturers ChangXin Memory Technologies (CXMT) and Yangtze Memory Technologies Corp (YMTC) spent a decade relying on government funding while recording financial losses.

An ongoing global buildout of artificial intelligence data centers has altered supply dynamics for these components. According to an investigation by Reuters based on interviews with more than a dozen industry executives, suppliers, and government officials, as well as a review of 50 Chinese policy filings, CXMT and YMTC—frequently referred to in domestic policy circles as the "twin stars" of Chinese memory—are selecting clients and negotiating higher prices as supply tightens.

Key Reported Developments

• Cleanroom Dispute in Hefei: CXMT ordered engineers from SiCarrier, an equipment vendor closely tied to Huawei, to leave its core research and development cleanrooms in Anhui province following an escalating dispute over chip prices, according to two sources cited by Reuters.

• Multibillion-Dollar Supply Agreements: CXMT signed a five-year contract valued at over $7 billion with TikTok parent ByteDance, following a separate agreement with Tencent worth more than $3 billion, three sources told Reuters.

• Revenue and Valuation Projections: CXMT recorded $7.5 billion in revenue for the first quarter of 2026—up 719% from a year earlier—ahead of its Shanghai stock market debut following an $8.6 billion IPO. Meanwhile, executives at YMTC are internally targeting a 1 trillion yuan ($148 billion) valuation as the firm prepares for its own public listing, two sources noted.

• Overseas Consumer Footprint: YMTC expanded into the South Korean market in June, introducing its consumer storage brand to fill a segment left open as domestic producers Samsung and SK Hynix shift production focus toward specialized AI memory.

• Equipment and Technical Limitations: Both Chinese manufacturers remain dependent on Deep Ultraviolet (DUV) lithography systems from Dutch producer ASML, while access to advanced Extreme Ultraviolet (EUV) equipment remains restricted due to export regulations.

Cleanroom Confrontation Highlights Pricing Standoff

Rising memory costs have led to commercial friction within China's domestic technology market.

According to two people familiar with the matter who spoke to Reuters, CXMT had been steadily increasing memory chip prices for Huawei Technologies. When Huawei requested price relief, CXMT refused to lower its rates.

The commercial disagreement escalated in June on the factory floor at CXMT's main research facility in Hefei. Maintenance engineers from SiCarrier—an equipment vendor with deep strategic links to Huawei—were working in the cleanrooms of CXMT's core R&D zone. Without advance notice, CXMT instructed the engineers to pack their tools and immediately leave the premises.

SiCarrier executives concluded that the expulsion was tied directly to the commercial price dispute between CXMT and Huawei, the sources told Reuters. Although the companies continue to conduct basic business, the SiCarrier engineers have not been granted re-entry to the R&D area.

CXMT, Huawei, and SiCarrier did not respond to requests for comment regarding the incident.

Shift in Pricing Leverage and Domestic Regulations

Historically, memory hardware manufactured by Chinese firms was priced lower than comparable products from market leaders Samsung, SK Hynix, and U.S.-based Micron Technology.

Six industry sources told Reuters that this price gap has closed. In recent weeks, CXMT charged higher prices for 64-gigabyte DDR5 server memory modules than Samsung's benchmark rate of approximately $1,240 per unit, according to two sources, though they declined to disclose the exact price difference. Samsung and SK Hynix declined or did not respond to questions regarding the comparison.

The cost increases led several Chinese electronics companies to lodge formal complaints with China's Ministry of Industry and Information Technology (MIIT) earlier this year, warning that price hikes were delaying product launches. In April, the ministry publicly stated it would address memory-chip hoarding aimed at driving up prices.

Concurrently, Chinese state policy has encouraged domestic procurement. State-owned enterprises face restrictions on buying memory from foreign suppliers, directing local demand toward domestic producers, two sources noted.

Production Expansion and Financial Results

Supported by China's state-backed "Big Fund" and local government funding from Anhui and Hubei provinces, CXMT and YMTC are moving toward public listings:

• CXMT Output Growth: CXMT is constructing two new fabrication plants in Shanghai and Hefei, while discussing plans for a third facility with local authorities, three sources told Reuters. The projects would increase manufacturing capacity to more than 600,000 wafers per month. One source suggested that if executed, this capacity could exceed Micron's production scale by 2030.

• YMTC Fab Pipeline: YMTC plans to construct two additional manufacturing plants alongside a facility scheduled to finish construction this year.

• Global Output Expectations: Chinese authorities have instructed both chipmakers to prioritize domestic clients. However, planned capacity expansions could allow them to supply both domestic and international markets by as early as 2027 when new production lines come online, three sources said.

Technical Constraints and Equipment Access

Despite expanding output, Chinese memory producers operate under hardware constraints tied to international trade regulations.

Lithography Equipment Dependencies

Both CXMT and YMTC rely on Deep Ultraviolet (DUV) lithography machinery from Dutch manufacturer ASML to print micro-circuits. The Dutch government has faced pressure from the U.S. government to restrict export licenses for advanced lithography machinery containing U.S. technology.

EUV Exclusion and High-Bandwidth Memory Gap

Competitors in South Korea and the U.S. produce advanced DRAM using Extreme Ultraviolet (EUV) lithography systems. Dutch export regulations have prevented Chinese foundries from obtaining EUV tools since 2019.

Although CXMT produces High-Bandwidth Memory (HBM) used in AI architectures, five sources told Reuters that the company's production capabilities remain roughly two generations, or several years, behind rival producers.

"If more restrictions are imposed on lithography equipment, that would be the biggest challenge for Chinese memory makers," said Ray Wang, a supply chain analyst at research firm SemiAnalysis. "China remains quite behind in that part of the equipment supply chain compared to other tool segments."

ASML declined to comment on potential future export regulations.

YMTC Domestic Tool Adoption

YMTC is relatively more insulated from potential tool restrictions. Following its addition to the U.S. Department of Commerce Entity List in 2022, YMTC replaced approximately half of its fabrication tools with domestic machinery and adapted production techniques to stack memory layers using available toolsets, according to two sources.

U.S. Policy Deliberations and Lobbying

The market growth of CXMT and YMTC has drawn scrutiny from officials in Washington. The U.S. Department of Defense has listed both firms as Chinese military companies, citing their involvement in Beijing's military-civil fusion program—a claim both manufacturers deny.

Congress is debating proposals to further restrict access to chipmaking tools. However, the Trump administration remains divided on whether to enforce stricter measures against the companies, four sources told Reuters.

Apple has argued to U.S. officials that it requires access to Chinese memory suppliers and sought assurances that CXMT would not be added to the trade blacklist, two sources disclosed. An interagency committee approved CXMT for addition to the Entity List last year, but Commerce Department officials have held off on implementing the restriction.

Western competitor Micron has lobbied U.S. lawmakers to implement tighter equipment curbs on both CXMT and YMTC.

Apple, Micron, the White House, and the U.S. Departments of Commerce, Defense, and State did not reply to requests for comment from Reuters.

Industry Context & Operational Risks

Editor's Note: The following section outlines broader commercial risks and market uncertainties associated with memory supply chain constraints, based on industry disclosures and analyst commentary.

• Lithography Sanctions Exposure: Further export restrictions from the Netherlands or the U.S. targeting DUV equipment could slow capacity additions at advanced process nodes.

• Blacklist Implementation Risks: Formal addition of CXMT to the U.S. Entity List would limit its access to U.S.-origin software and maintenance services.

• Advanced Node Technology Gap: Lacking EUV equipment limits the ability of domestic producers to rapidly close the performance gap in multi-layer High-Bandwidth Memory (HBM).

• Domestic Customer Friction: Sharp price increases create commercial tension with major domestic hardware producers and risk further regulatory scrutiny from Chinese industrial ministries.

Official Response Status

During its reporting, Reuters contacted multiple entities regarding the developments outlined in this report:

• No Response Received: CXMT, YMTC, Huawei, SiCarrier, ByteDance, Tencent, Apple, Micron, the White House, the U.S. Commerce Department, the U.S. Defense Department, the U.S. State Department, China's Ministry of Industry and Information Technology, and provincial governments in Anhui and Hubei did not respond to queries.

• Declined to Comment: ASML, Samsung Electronics, and SK Hynix declined or chose not to comment on pricing and export policies.

Summary of Key Takeaways

1. Global demand for AI server hardware has tightened memory supply, giving Chinese manufacturers CXMT and YMTC greater pricing power.

2. CXMT has raised prices significantly, leading to commercial friction with Huawei and driving high-value supply deals with ByteDance ($7B+) and Tencent ($3B+).

3. Both companies are advancing public listing plans, with CXMT making its Shanghai market debut following an $8.6B IPO and YMTC pursuing a 1 trillion yuan valuation target.

4. Equipment restrictions, specifically regarding advanced ASML lithography systems, remain a primary technical bottleneck for domestic expansion.

Sources

Primary Source

• Reuters - How the 'twin stars' of China, CXMT and YMTC, changed the chip game (Authors: Fanny Potkin, Karen Freifeld)

• Photo Credit:

  Photo: REUTERS