China’s memory chipmakers ChangXin Memory Technologies (CXMT) and Yangtze Memory Technologies Corp (YMTC) are leveraging an AI-driven supply crunch to dictate pricing and secure massive deals, including a $7 billion-plus agreement between CXMT and ByteDance, while Apple tests CXMT chips for its Chinese market devices.
The power dynamic in the global semiconductor market is shifting. For years, Chinese memory firms operated on thin margins and heavy government subsidies. Now, the explosion of AI data centers has turned humble memory components into high-demand assets, granting the so-called twin stars
of Chinese memory—CXMT and YMTC—significant pricing power over their customers, including some of the world’s largest tech giants.
CXMT’s Pricing Standoff with Huawei
This newfound leverage has led to internal friction among China’s tech elite. According to Reuters, CXMT spent months hiking prices for Huawei. When Huawei pushed back against the escalating costs, the dispute manifested physically on the factory floor.
In June, CXMT abruptly ordered engineers from SiCarrier—an equipment vendor with deep ties to Huawei—to leave the cleanrooms of its core R&D zone in Hefei, Anhui province. While the companies continue to do business, those engineers have not been allowed back into the R&D zone, a move executives at SiCarrier viewed as a direct result of the power struggle between the chipmaker and the tech behemoth.
CXMT is no longer just a state-backed project; it is now the world’s fourth-largest producer of DRAM. This scale allows it to dictate prices that in some instances exceed those of South Korean rivals Samsung and SK Hynix.
Apple’s Strategy to Bypass Memory Shortages
As a global memory shortage drives up costs for Macs and iPads, Apple is attempting to diversify its supply chain by looking toward China. The company has begun testing DRAM chips from CXMT specifically for devices sold within the Chinese market.
This is a strategic hedge. By sourcing Chinese chips for the domestic Chinese market, Apple hopes to free up supply from other vendors for the U.S. market. However, the move is fraught with geopolitical risk. Both CXMT and YMTC appear on the Defense Department’s 1260H list of companies suspected of ties to the People’s Liberation Army.
Apple is currently lobbying the U.S. government to avoid a political upset and is seeking assurances that CXMT will not be added to the Commerce Department’s Entity List. Such a designation would impose strict licensing restrictions, effectively blocking Apple from using the firm as a supplier. Tim Cook has reportedly discussed these matters with Trump administration officials, including Treasury Secretary Scott Bessent.
The $7 Billion ByteDance Deal and IPO Ambitions
While Apple negotiates, other Chinese giants are already signing. CXMT recently signed a five-year agreement with ByteDance, the owner of TikTok, valued at more than $7 billion.
This massive capital influx coincides with an aggressive push toward public markets.
- CXMT: Reportedly plans to raise at least 29.5 billion yuan ($4.3 billion) in an upcoming Shanghai IPO.
- YMTC: Has formally launched IPO counseling to enter the capital markets.
The scale of this expansion is significant. Data from SemiAnalysis indicates CXMT’s market share is expected to grow from roughly 11% last year to 15% by 2028, driven by new production lines in Beijing, Shanghai, and Hefei.
Washington’s Containment vs. Market Reality
The rise of CXMT and YMTC has put them on a collision course with U.S. national security policy. YMTC is already on the U.S. Entity List, restricting its access to American software and tools. The Pentagon has designated both firms as Chinese military companies, citing their role in military-civil fusion
.
Despite these designations, the U.S. government is facing a dilemma. While Micron has pushed for tighter restrictions, Apple has argued it needs Chinese memory. This tension has led the Trump administration to hold off on adding CXMT to the trade blacklist, despite the company being flagged as a national security risk.
The shift is clear: China’s memory sector has transitioned from a subsidized experiment into a market force capable of leveraging AI demand to challenge the dominance of South Korean and U.S. chipmakers, even while navigating a tightening web of U.S. sanctions.
