China Chip Giant Secures $2.94B Tencent Deal

ChangXin Memory Technologies (CXMT), a Chinese memory chip manufacturer, has secured a significant long-term supply agreement with Tencent Holdings worth over 20 billion yuan ($2.94 billion). This substantial deal, reported by sources close to the matter, covers several years of DRAM chip supply critical for servers powering cloud computing and AI workloads.

The agreement is a major boost for CXMT as it prepares for its upcoming initial public offering on the Shanghai Stock Exchange's STAR Market. The company aims to raise 29.5 billion yuan, positioning the listing as one of mainland China's largest in recent years. This collaboration represents a strong vote of confidence in CXMT, which has been striving to compete in a global DRAM market dominated by established players.

This partnership reflects a wider trend of domestic internet giants like Tencent seeking secure memory chip supplies amidst a persistent global shortage. Prices for DRAM chips have surged, with forecasts predicting continued upcycles. CXMT, currently the world's fourth-largest DRAM maker, has experienced remarkable revenue growth, reporting a 700% year-on-year increase in its first-quarter revenue.

To meet anticipated demand and capitalize on the market upcycle, CXMT is aggressively expanding its production capacity. The company is building a new DRAM plant in Shanghai and enhancing existing facilities. Upon completion of these expansions, CXMT plans to double its DRAM wafer output to approximately 600,000 wafers per month. CXMT is also in discussions with other major Chinese internet companies for similar collaborations.