Chinese memory chipmaker ChangXin Memory Technologies (CXMT) has reportedly signed a long-term supply agreement with Tencent Holdings worth over $3 billion, according to sources familiar with the matter. The deal, which covers several years of DRAM chip supply for servers, is seen as a major endorsement of CXMT's domestically made DDR5 chips and a significant step towards China's goal of self-sufficiency in the memory market.

What Happened

The reported agreement between CXMT and Tencent comes at a critical juncture for both companies. CXMT, which received approval from the Shanghai Stock Exchange in May for an initial public offering on the STAR Market, is seeking to raise 29.5 billion yuan ($4.1 billion) in what would be the largest mainland A-share IPO so far this year. The company's first-quarter revenue hit 50.8 billion yuan, up 700% year-on-year, while it recorded a net profit of 33.012 billion yuan ($4.56 billion).

Tencent, one of China's largest cloud operators, has been testing CXMT's domestically made DDR5 chips for use in its servers, which are critical components for cloud computing, databases, and AI workloads. The deal reflects a broader shift in China's technology supply chain, as domestic internet giants scramble for memory chip supply amid a global shortage.

Background and Context

CXMT has been at the forefront of China's strategic push to build a foothold in the global DRAM market dominated by South Korean and US companies. Founded in 2016 with government backing, the company has been rapidly expanding its capacity and improving its yields. As of Q1, CXMT's DDR5 yields still lagged behind Western peers, but the company is expected to catch up soon.

The global memory market has been experiencing a prolonged shortage, leading to soaring memory chip costs. DRAM contract prices surged roughly 95% quarter-on-quarter in the first quarter of 2026, according to UBS, with the investment bank forecasting the memory upcycle to continue until at least late 2027. The global memory market could reach $786 billion this year and $1.2 trillion in 2027, UBS estimates.

Why it Matters

The reported deal between CXMT and Tencent has significant implications for the adult industry, which relies heavily on cloud computing and AI workloads. The agreement ensures a stable supply of high-quality DRAM chips for servers, which is critical for maintaining low latency and high performance in cloud-based applications.

Moreover, the deal reflects China's growing ambition to become self-sufficient in the memory market. As the country continues to invest heavily in AI infrastructure, domestic companies like CXMT are well-positioned to meet the increasing demand for high-performance DRAM chips.

What Comes Next

The reported agreement between CXMT and Tencent is expected to have a ripple effect on the global memory market. Other major Chinese internet companies, including Alibaba Cloud, ByteDance, and Xiaomi, are also in talks with CXMT for similar collaborations. The company's rapid expansion and improving yields make it an attractive partner for domestic and international customers alike.

CXMT's success is also expected to boost China's efforts to reduce its reliance on foreign memory suppliers. As the country continues to invest heavily in AI infrastructure, domestic companies like CXMT are well-positioned to meet the increasing demand for high-performance DRAM chips.

Key Facts

  • CXMT has signed a long-term supply agreement with Tencent Holdings worth over $3 billion.
  • The deal covers several years of DRAM chip supply for servers and is seen as a major endorsement of CXMT's domestically made DDR5 chips.
  • CXMT received approval from the Shanghai Stock Exchange in May for an initial public offering on the STAR Market, seeking to raise 29.5 billion yuan ($4.1 billion).
  • The company's first-quarter revenue hit 50.8 billion yuan, up 700% year-on-year, while it recorded a net profit of 33.012 billion yuan ($4.56 billion).
  • CXMT is expected to catch up with Western peers in DDR5 yields soon.