China's memory chipmaker ChangXin Memory Technologies (CXMT) has reportedly signed a long-term supply deal worth more than 20 billion yuan (about 4.5 trillion won) to provide server DRAM to Tencent. As demand for artificial intelligence (AI) servers grows, China's big tech companies are increasingly moving to secure domestically made memory.
Reuters reported on the 29th, citing multiple sources, that CXMT agreed to supply server DRAM to Tencent Holdings for several years. Depending on the source, the contract period was conveyed as up to three years or five years.
It was not confirmed whether high bandwidth memory (HBM) was included in the deal. HBM is high-performance DRAM required for AI accelerators and is led by Samsung Electronics, SK hynix and Micron. CXMT did not respond to Reuters' request for comment.
CXMT is China's largest DRAM maker. While the three leading companies—Samsung Electronics, SK hynix and Micron—account for more than 90% of the global DRAM market, it is cited as the representative latecomer from China. According to market researcher Omdia, CXMT's global DRAM market share rose to 7.67% in the fourth quarter of last year.
Industry observers say Tencent's large-scale long-term contract could bolster CXMT's growth momentum. With more investment in AI services and cloud infrastructure, demand for server memory is surging, and clients are expanding long-term supply contracts to secure stable volumes.
For Chinese corporations, it also means raising the share of domestically produced memory amid U.S. semiconductor restrictions on China. Reuters said CXMT is discussing similar supply partnerships with other Chinese internet companies. In its initial public offering (IPO) prospectus, CXMT named Tencent, Alibaba Cloud, ByteDance Ltd., Lenovo and Xiaomi as major clients. Some analysts say that if China's big tech increases the use of domestically made server DRAM, it could pose a mid- to long-term burden on the sales of commodity DRAM to China by Samsung Electronics and SK hynix.
CXMT is also accelerating capacity expansion. It currently operates three 12-inch DRAM wafer fabs in Beijing and Hefei, Anhui Province, with a monthly capacity reportedly around 300,000 wafers. Reuters reported that CXMT has begun building a new DRAM plant in Shanghai and that once the expansion is completed, monthly capacity could rise to about 600,000 wafers.
Existing facilities in Shanghai are said to focus on HBM packaging. CXMT plans to raise 29.5 billion yuan (about 6.7 trillion won) through an IPO this year and invest it in expanding wafer production lines and advancing DRAM technology.
Its results are also growing rapidly. In its prospectus, CXMT said first-quarter revenue this year jumped 719.13% from a year earlier to 50.8 billion yuan (about 11.5 trillion won). Rising memory prices and stronger demand for server DRAM are seen as supporting the growth.
However, Reuters, citing some sources, reported that CXMT is experiencing low Production yield issues in DDR5 DRAM. DDR5 is the latest commodity DRAM standard used in servers and PCs. In high value-added products such as HBM, the gap with Samsung Electronics, SK hynix and Micron also remains large.