How the 'twin stars' of China, CXMT and YMTC, changed the chip game

CXMT logo and computer motherboard are seen in this illustration taken April 14, 2026. REUTERS/Dado Ruvic/Illustration/File Photo Purchase Licensing Rights, opens new tab

• Summary
• Companies

• China's CXMT and YMTC flex newfound pricing power amid scramble for memory chip supply
• CXMT expelled Huawei-linked SiCarrier engineers from R&D zone amid price dispute, sources say
• CXMT has signed $7 billion-plus deal with Bytedance, Chinese owner of TikTok, sources say

SINGAPORE, July 24 (Reuters) - For months, Chinese chip manufacturer ChangXin Memory Technologies (CXMT) had been hiking prices on Huawei, one of the country`s biggest technology companies. The chipmaker held firm when Huawei demanded relief from the escalating costs, according to two people familiar with the matter.The standoff came to a head on CXMT`s factory floor in June. A group of engineers from a chipmaking-equipment vendor with deep strategic ties to Huawei had been working in ​the cleanrooms at CXMT`s core research and development zone in Hefei, Anhui province. Without warning, CXMT ordered the engineers, who had been helping with equipment maintenance, to pack their tools and leave the factory floor immediately, the two sources said.

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Executives at the Huawei-connected equipment vendor, SiCarrier, concluded the confrontation was the result ‌of the power struggle between CXMT and Huawei, the people told Reuters. The companies still do business but the engineers haven`t been allowed back into the R&D zone, the two people said.CXMT, Huawei and SiCarrier didn`t respond to questions about the incident.The clash illustrates the changing dynamics of China`s semiconductor industry. CXMT has risen to become the world`s fourth-biggest maker of memory, including the DRAM variety used in smartphones, laptops and servers. Now, the company is powerful enough to charge prices even Huawei can`t stomach.Memory chips that help devices run apps and store files were once a low-margin business. CXMT and its flash-memory counterpart, Yangtze Memory Technologies Corp, or YMTC, spent years relying on government funding and racking up losses.But the global buildout of AI data centers has transformed the humble components into one of the world's most sought-after products, sparking battles over pricing and a scramble for supply. The Chinese ​memory makers are now picking clients and dictating prices, four people familiar with the matter told Reuters. In some cases, they are charging more than their larger South Korean rivals, Samsung (005930.KS), opens new tab and SK Hynix (000660.KS), opens new tab, as skyrocketing demand for memory chips forces Chinese buyers to pay ever-higher prices.CXMT this month signed a five-year agreement with ByteDance, TikTok`s Chinese owner, ​worth more than $7 billion, three people familiar with the arrangement told Reuters. ByteDance didn`t respond to a request for comment about the deal, which hasn`t been reported previously.This 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. It reveals new details on their pricing power, strategies and dealmaking as both companies – known in China as the “twin stars” of memory – race toward blockbuster IPOs.Neither chipmaker responded to requests for comment about their pricing, strategy, and growing U.S. scrutiny of ​their market power.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, a designation that 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 (AAPL.O), opens new tab 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.

PREPARING TO GO PUBLIC

The geopolitical tussle hasn`t ​slowed the Chinese chipmakers` march toward public listings.CXMT, which will make its Shanghai market debut on Monday after an $8.6 billion IPO, 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.As YMTC prepares for its own IPO, some executives are pushing internally for a 1 trillion yuan ($148 billion) valuation target, ​according to two people.Both firms are supported by the Big Fund, a Chinese state-backed semiconductor investment vehicle. They have also received support from local and provincial governments, including Anhui province for CXMT and Hubei province for YMTC. The provincial authorities and the investment fund didn`t respond to requests for comment.Chinese officials view the companies as strategic infrastructure central to Beijing's drive for technological self-reliance, corporate filings and policy documents show.Now, the chipmakers ‌are taking the fight ⁠to their rivals' doorsteps.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, according to three sources, but its capacity is stretched by heavy domestic demand.Chinese authorities have asked CXMT and YMTC to prioritize supply to domestic firms, three other people told Reuters. But 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, according to three sources. 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.Despite their growing dominance, the Chinese memory makers face constraints. Both companies ​rely on deep ultraviolet lithography machines — used to print the tiny circuits that make chips — ​from Dutch giant ASML (ASML.AS), opens new tab. 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…