Chinese memory chipmaker ChangXin Memory Technologies (CXMT) has secured a long-term supply agreement worth more than 20 billion yuan ($2.94 billion) with internet giant Tencent, in a deal that underscores China’s accelerating push to build a self-sufficient semiconductor ecosystem as demand for artificial intelligence infrastructure continues to surge.
According to people familiar with the matter who spoke to Reuters, the agreement covers the supply of dynamic random-access memory (DRAM) chips for Tencent’s servers over several years. Two sources said the contract runs for as long as three years, while another said it could extend to five years.
The previously undisclosed agreement comes at a pivotal moment for the Hefei-based semiconductor manufacturer as it prepares for one of mainland China’s largest stock market debuts in recent years. In May, the Shanghai Stock Exchange approved CXMT’s application to list on the STAR Market, where the company plans to raise 29.5 billion yuan to finance further expansion.
The size of Tencent’s commitment represents one of the strongest commercial endorsements yet for China’s largest DRAM producer, signaling growing confidence among the country’s biggest technology companies in domestically produced memory chips at a time when geopolitical tensions continue to reshape global semiconductor supply chains.
The agreement is also part of a bigger shift by China’s leading cloud and artificial intelligence companies, which are increasingly seeking to reduce dependence on foreign semiconductor suppliers as U.S. export restrictions continue to limit China’s access to advanced chip technologies.
DRAM chips are indispensable components in modern data centers, powering cloud computing platforms, artificial intelligence training clusters, enterprise databases and high-performance computing systems. Unlike processors that execute calculations, DRAM temporarily stores the massive volumes of data AI models require to operate efficiently. As AI models become larger and more computationally intensive, memory capacity has emerged as one of the industry’s most critical bottlenecks.
The global shortage of advanced memory chips has made long-term supply agreements increasingly valuable.
While details of the contract remain confidential, it was not immediately clear whether the agreement includes CXMT’s high-bandwidth memory (HBM), the premium category of memory used alongside advanced AI processors from companies such as Nvidia and AMD. HBM has become one of the most strategically important components in AI servers because it significantly increases processing speed while reducing power consumption.
Founded in 2016 with strong backing from Chinese state funds, CXMT has become the centerpiece of Beijing’s efforts to establish an indigenous DRAM industry capable of competing with global leaders Samsung Electronics, SK Hynix, and Micron Technology.
The company has long trailed its South Korean and American rivals technologically. However, China’s determination to strengthen semiconductor self-sufficiency has accelerated investment, research, and customer adoption, particularly as export controls imposed by the United States have restricted Chinese companies’ access to advanced foreign semiconductor technologies.
Tencent’s decision to secure multi-year supplies from CXMT illustrates how China’s largest internet companies are increasingly integrating domestic chipmakers into their long-term AI infrastructure strategies.
The company is not alone.
According to additional sources familiar with the discussions, CXMT is negotiating similar long-term collaborations with several other major Chinese technology companies. Its IPO prospectus already identifies Tencent, Alibaba Cloud, ByteDance, Lenovo, and Xiaomi among its major customers.
These partnerships are becoming more important as Chinese hyperscale cloud providers rapidly expand artificial intelligence infrastructure to compete with global leaders such as Amazon Web Services, Microsoft Azure and Google Cloud.
The DRAM Market is Having A Field Day
The timing of the agreement also coincides with one of the strongest memory market upcycles in years.
According to UBS, DRAM contract prices surged approximately 95% quarter-on-quarter during the first quarter of 2026 as AI-driven demand collided with constrained supply. The investment bank expects the memory supercycle to continue until at least the end of 2027.
UBS estimates the global memory market could grow to $786 billion this year before expanding further to approximately $1.2 trillion in 2027, fueled largely by investments in generative AI, cloud computing and high-performance data centers.
That favorable pricing environment has dramatically transformed CXMT’s financial performance. The company reported first-quarter revenue of 50.8 billion yuan, representing an extraordinary 700% increase from a year earlier. It also swung to a net profit of 25 billion yuan after recording a loss of 1.6 billion yuan during the same period last year, highlighting how rising memory prices and surging AI demand have reshaped industry economics.
Large cloud computing companies have increasingly responded to supply shortages by locking in future production through multi-year purchasing agreements.
UBS noted that contracts featuring price bands, advance payments and guaranteed purchase volumes have become common across the industry, with some hyperscalers already committing more than half of their projected memory requirements over three-to-five-year periods.
For CXMT, the Tencent agreement provides both predictable revenue and validation ahead of its public listing. The company is simultaneously embarking on one of the largest capacity expansion programmes in China’s semiconductor industry.
Sources familiar with the plans said CXMT has begun constructing a new DRAM manufacturing facility in Shanghai in addition to its existing packaging plant dedicated to high-bandwidth memory products. The company currently operates three 12-inch wafer fabrication plants, including two in Hefei and one in Beijing, with a combined production capacity of roughly 300,000 wafers per month.
Once the new Shanghai facility and other planned expansions become operational, CXMT expects to double production capacity to approximately 600,000 wafers each month, significantly strengthening China’s domestic memory manufacturing capability.
The expansion reflects Beijing’s broader industrial strategy of building resilient domestic semiconductor supply chains capable of supporting future growth in artificial intelligence, advanced manufacturing and cloud computing while reducing exposure to foreign technology restrictions.
Nevertheless, significant technological challenges remain. According to one of the sources familiar with the company’s operations, CXMT encountered relatively low production yields for its next-generation DDR5 memory products during the first quarter, indicating that the company still trails established competitors in manufacturing efficiency and advanced process technology.
Industry analysts note that while China’s memory industry has made remarkable progress in expanding capacity, closing the technology gap with Samsung Electronics and SK Hynix remains a longer-term challenge requiring sustained investment in research, manufacturing expertise, and advanced process engineering.
Even so, the Tencent agreement signals that commercial acceptance of Chinese-made memory chips is accelerating.
