CXMT ordered engineers from chipmaking-equipment vendor SiCarrier to leave its core research and development zone in Hefei, Anhui province, in June, according to two people familiar with the matter. The engineers had been helping with equipment maintenance. They were told to get out. They still haven’t been allowed back.
That small, ugly scene says plenty about who gets to move where, who gets to stay, and who gets shut out when the bosses start fighting over supply, price and control. Executives at SiCarrier concluded the confrontation was the result of the power struggle between CXMT and Huawei, the people said. CXMT, Huawei and SiCarrier didn’t respond to questions about the incident.
Who Gets to Set the Terms
The clash shows how Chinese memory makers have climbed into a position where they can pick clients and dictate prices. CXMT has risen to become the world’s fourth-biggest maker of memory, including DRAM used in smartphones, laptops and servers. Its flash-memory counterpart, Yangtze Memory Technologies Corp, or YMTC, has also gained clout as the global buildout of AI data centers has turned memory chips into one of the world’s most sought-after products.
That demand has sparked battles over pricing and a scramble for supply. Chinese memory makers are now picking clients and dictating prices, and in some cases charging more than their larger South Korean rivals, Samsung and SK Hynix, as skyrocketing demand forces Chinese buyers to pay ever-higher prices. The people at the bottom of that chain are the ones eating the cost.
CXMT this month signed a five-year agreement with ByteDance, TikTok’s Chinese owner, worth more than $7 billion, according to three people familiar with the arrangement. ByteDance didn’t respond to a request for comment. The account of how CXMT and YMTC are wielding their newfound clout is based on interviews with more than a dozen people, including executives, engineers, suppliers and U.S. officials, and a Reuters review of 50 Chinese government policy documents and company disclosures.
The story also says the two companies, known in China as the "twin stars" of memory, are racing toward blockbuster IPOs. CXMT will make its Shanghai market debut on Monday after an $8.6 billion IPO. It has erased a decade of losses in six months, booking $7.5 billion in revenue for the first quarter, a 719% increase from a year earlier.
State Backing, Private Power
Both firms are supported by the Big Fund, a Chinese state-backed semiconductor investment vehicle, and have also received support from local and provincial governments, including Anhui province for CXMT and Hubei province for YMTC. Chinese officials view the companies as strategic infrastructure central to Beijing’s drive for technological self-reliance, corporate filings and policy documents show.
That’s the apparatus at work: state money, provincial backing and industrial policy all feeding companies that now decide who gets chips and at what price. YMTC is preparing for its own IPO, and some executives are pushing internally for a 1 trillion yuan, or $148 billion, valuation target, according to two people.
The Chinese companies’ grip on chip supply is putting them on a collision course with Washington. The Pentagon has designated both firms as Chinese military companies for what it says is their role in aiding China’s military-civil fusion strategy, a charge they deny. YMTC is already on the U.S. Entity List, which has restricted its access to U.S.-origin suppliers, software and tools used in memory-chip production.
Congress is debating restrictions that would further curb both companies’ access to chipmaking equipment, but the Trump administration is divided on whether to crack down on them, according to four people familiar with the discussions. Apple has argued that it needs Chinese memory and has sought assurances that CXMT won’t be placed on the Entity List, two of these people said. CXMT was approved by a U.S. interagency committee last year for addition to the trade blacklist, which the Commerce Department oversees, but officials have held off, Reuters reported last month. Micron, the Chinese firms’ main Western competitor, has pushed U.S. lawmakers to enact further restrictions on CXMT and YMTC, including curbing their access to chipmaking equipment. Apple and Micron didn’t reply to questions about the discussions. The White House and the departments of Commerce, Defense and State also didn’t respond to requests for comment.
What the Boom Costs
The boom hasn’t made memory cheap for everyone. In recent weeks, CXMT has charged more than Samsung’s roughly $1,240-per-unit price for comparable 64-gigabyte DDR5 server memory modules, two people said, though they wouldn’t disclose the precise CXMT price. Several Chinese electronics and tech firms complained to China’s Ministry of Industry and Information Technology this year about price increases by CXMT and YMTC, blaming the hikes for delaying product launches, according to two people.
The ministry said in April that it would crack down on memory-chip hoarding aimed at driving up prices. The government has also steered demand to domestic chip suppliers, and Chinese state-owned firms are restricted from buying from foreign memory makers, according to two sources. So much for a free market. The state points demand one way, the firms raise prices, and the buyers at the bottom get squeezed.
YMTC entered the South Korean market in June, launching its consumer memory storage brand and exploiting a gap left by Samsung, SK Hynix and Micron of the U.S., which have shifted away from that segment to focus on more-advanced chips. CXMT aims to break into the U.S. in the long term, but its capacity is stretched by heavy domestic demand. Chinese authorities have asked CXMT and YMTC to prioritize supply to domestic firms, and the chipmakers also plan to expand manufacturing capacity, which could allow them to serve both China and overseas markets as soon as 2027, when new fabrication plants come online.
CXMT is building two new plants in Shanghai and Hefei and is in talks with local authorities elsewhere about a third. Those projects would more than double production capacity to more than 600,000 wafers per month. If all goes to plan, CXMT’s capacity would overtake Micron by 2030, one of the people said. Reuters reported in April that YMTC plans two more factories, in addition to one due to be completed this year.
The Limits of Control
Despite their growing dominance, the Chinese memory makers face constraints. Both companies rely on deep ultraviolet lithography machines from Dutch giant ASML. The Dutch government has faced U.S. pressure to restrict sales of advanced lithography equipment to Chinese companies because of the machines’ importance in producing cutting-edge semiconductors with potential military applications and because the machines contain U.S. technology.
The Chinese memory makers’ Korean and American competitors make DRAM chips using ASML’s more-advanced extreme ultraviolet lithography machines. China has been barred from obtaining those machines since the Dutch government began withholding export licenses in 2019. While CXMT has produced its own high-bandwidth memory, an ultrafast format crucial for AI, five sources said it remains two generations, or several years, behind its rivals.
Ray Wang, an analyst who focuses on memory and AI supply chains at research firm SemiAnalysis, said: "If more restrictions are imposed on lithography equipment, that would be the biggest challenge for Chinese memory makers. China remains quite behind in that part of the equipment supply chain compared to other tool segments."
YMTC is more insulated than CXMT from such a scenario. Since its addition to the U.S. Entity List in 2022, YMTC has replaced around half of its equipment with domestic machinery and developed new techniques to stack memory layers using less-advanced tools, according to two people. Chinese memory chips were long seen by foreign executives as cheaper alternatives to Western and South Korean products, but that is no longer the case, six people told Reuters.
The whole setup is a familiar one: state support, corporate consolidation, foreign pressure, and ordinary buyers left to absorb the damage. The companies at the center of it are richer, louder and more powerful than before. The workers, suppliers and tech firms around them are the ones forced to live with the terms.