China’s leading memory chip manufacturers, ChangXin Memory Technologies (CXMT) and Yangtze Memory Technologies Corp (YMTC), are emerging as increasingly influential players in the global semiconductor industry, using strong demand for memory chips to command higher prices, select customers and secure major long-term supply agreements, according to Reuters interviews with industry sources and a review of government and corporate documents.
The companies’ growing market strength was highlighted by a recent dispute involving Huawei, one of China’s largest technology firms. According to two people familiar with the matter, CXMT had been steadily increasing chip prices for Huawei over several months and refused to reduce them despite pressure from the company. The disagreement escalated in June when CXMT ordered engineers from SiCarrier, a chipmaking equipment supplier with close strategic ties to Huawei, to leave the cleanrooms in its core research and development facility in Hefei, Anhui province. The engineers, who had been assisting with equipment maintenance, have not been permitted to return to the R&D zone, the sources said. Reuters reported that executives at SiCarrier concluded the incident stemmed from the broader power struggle between CXMT and Huawei. CXMT, Huawei and SiCarrier did not respond to questions about the incident.
The episode reflects the changing balance of power within China’s semiconductor sector. Once dependent on government support and operating at a loss, CXMT and YMTC have benefited from a global surge in demand for memory chips driven by the rapid expansion of artificial intelligence data centres. According to four people familiar with the matter, the two companies are now able to dictate prices and choose customers, in some cases charging more than South Korean rivals Samsung and SK Hynix as Chinese buyers compete for limited supplies.
Reuters reported that CXMT this month signed a five-year agreement worth more than $7 billion with ByteDance, the Chinese owner of TikTok. Three people familiar with the arrangement said the deal had not previously been reported. ByteDance did not respond to a request for comment. Reuters also reported that the company reached a supply agreement worth more than $3 billion with Tencent in June.
The account of the companies’ growing influence is based on interviews with more than a dozen executives, engineers, suppliers and US officials, as well as Reuters’ review of 50 Chinese government policy documents and company disclosures. Neither CXMT nor YMTC responded to requests for comment regarding their pricing strategies, business plans or increasing scrutiny from Washington.
The two companies are also attracting growing attention from US policymakers. The Pentagon has designated both firms as Chinese military companies, alleging they support China’s military-civil fusion strategy, an accusation both companies deny. YMTC is already included on the US Entity List, restricting its access to American-origin technology used in chip production. Congress is considering additional restrictions on both companies, although Reuters reported that the Trump administration remains divided over whether to tighten controls further.
According to two people familiar with the discussions, Apple has argued that it requires Chinese memory chips and has sought assurances that CXMT will not be added to the Entity List. Reuters reported last month that CXMT had been approved by a US interagency committee for inclusion on the trade blacklist but that officials had delayed the move. Micron, the companies’ principal Western competitor, has urged US lawmakers to impose additional restrictions on CXMT and YMTC, including limiting their access to chipmaking equipment. Apple, Micron, the White House and the US Departments of Commerce, Defense and State did not respond to requests for comment.
Despite geopolitical tensions, both companies continue to pursue ambitious expansion plans. CXMT is preparing to launch an $8.6 billion initial public offering in Shanghai on Monday after reporting first-quarter revenue of $7.5 billion, a 719% increase from a year earlier, erasing a decade of losses within six months. YMTC is also preparing for a public listing, with some executives internally targeting a valuation of 1 trillion yuan ($148 billion), according to two people.
Supported by China’s state-backed Big Fund and provincial governments, the companies are regarded by Chinese authorities as strategically important to the country’s technological self-reliance. YMTC entered the South Korean market in June with its consumer memory storage brand, while CXMT has longer-term ambitions to enter the US market once additional manufacturing capacity comes online. Chinese authorities have instructed both companies to prioritise domestic customers, although Reuters reported that planned factory expansions could enable them to serve both Chinese and overseas markets from 2027. CXMT is constructing two new fabrication plants in Shanghai and Hefei and discussing a third facility with local authorities, with one source saying the projects would more than double production capacity to over 600,000 wafers per month and potentially allow CXMT to overtake Micron by 2030.
Even as their market position strengthens, both companies continue to face technological constraints. They remain reliant on deep ultraviolet lithography equipment supplied by Dutch manufacturer ASML, while their South Korean and American competitors use the more advanced extreme ultraviolet machines that China has been unable to obtain since 2019 because of Dutch export restrictions. Reuters reported that although CXMT has developed its own high-bandwidth memory chips for artificial intelligence applications, the technology remains two generations behind leading competitors. Analysts said any further restrictions on access to advanced lithography equipment would represent the most significant challenge facing China’s memory chip industry, even as rising demand continues to transform the country’s once loss-making producers into major global competitors.
