China's CXMT wins $3B memory supply deal with Tencent: Reuters

Changxin Memory Technologies (CXMT), China’s leading memory chipmaker, has secured a $3 billion supply deal with Tencent, according to industry sources. The agreement underscores the growing demand for memory chips in China, driven by the artificial intelligence (AI) boom and surging computing needs.

CXMT, which is preparing for a major initial public offering (IPO) on China’s STAR Market, has seen a dramatic rise in revenue and profitability in recent quarters. In the first quarter of 2026, the company reported revenue of $7.3 billion, a 700% year-on-year increase, and a net profit of $4.8 billion, compared to a net loss of $1 billion in the same period in 2025. The company expects first-half 2026 revenue to reach between 110 billion yuan and 120 billion yuan ($17.62 billion), driven by strong global memory chip prices and increased production capacity.

The Tencent deal is part of a broader trend of Chinese tech firms sourcing memory chips from domestic suppliers to reduce reliance on foreign manufacturers. CXMT’s DRAM products have gained traction in the market, with the company’s market share expected to rise from 9% in 2025 to 12% in 2027. The company’s gross margin has also improved significantly, reaching 37.8% in fiscal year 2025, compared to negative margins in previous years.

CXMT’s rapid growth has been supported by strong government backing and a localized supply chain in Hefei, where the company has established a dense industrial ecosystem. The Hefei municipal government has played a key role in funding and developing the company’s infrastructure, allowing it to scale production and improve efficiency.

The company’s IPO, expected to be one of the largest semiconductor listings in China, will provide further insight into its financials and strategic direction. CXMT plans to use a portion of the IPO proceeds to fund wafer production line upgrades and DRAM technology development. While the company has not yet disclosed specific plans for high-bandwidth memory (HBM), analysts expect it to expand into that segment as demand for AI accelerators grows.

The Tencent deal highlights the increasing importance of domestic memory suppliers in China’s tech ecosystem and reflects the broader shift toward self-sufficiency in critical semiconductor components.