Summary
ChangXin Memory Technologies (CXMT) has reached a long-term supply agreement with Tencent Holdings that is worth in excess of 20 billion yuan ($2.94 billion), according to three people with direct knowledge of the arrangement. The contract, which covers server dynamic random-access memory (DRAM) over multiple years, was confirmed to Reuters by the sources who spoke on condition of anonymity because the details remain private.
Deal structure and duration
All three sources said the agreement is a multi-year commitment for DRAM intended for servers, a critical element for cloud computing, databases and AI workloads. Two sources described the contract as spanning up to three years, while a third source said it extends for up to five years. The precise annual volumes, pricing mechanics and whether the pact includes CXMT’s high-bandwidth memory (HBM) were not disclosed by the sources.
DRAM is essential for modern data centres to run applications without bottlenecks, and long-term supply contracts have become a priority for major cloud operators amid a prolonged global shortage that has pushed memory prices sharply higher.
Timing and strategic significance
The agreement comes as CXMT prepares for a significant public listing on the Shanghai Stock Exchange’s STAR Market. The company received approval in May for an initial public offering that targets 29.5 billion yuan in proceeds, positioning the listing as one of the largest mainland China offerings in recent years. The Tencent commitment represents a major commercial endorsement for the Hefei-based DRAM maker, which has been seeking to build credibility against global competitors.
Market context and price environment
Sources and available industry commentary point to a broader scramble among Chinese internet companies to secure memory supply. UBS data cited by the original reporting indicates DRAM contract prices surged roughly 95% quarter-on-quarter in the first quarter of 2026, and the bank forecasted the memory upcycle to persist until at least late 2027. UBS also estimated the global memory market could reach $786 billion in the current year and $1.2 trillion in 2027.
Within that environment, long-term agreements with price bands and pre-payment arrangements have become more common as hyperscalers lock in supply. UBS noted some cloud firms have committed more than half of their volumes under three-to-five-year terms.
CXMT’s recent performance and positioning
CXMT reported a sharp turnaround in financial performance amid the upcycle. The company recorded first-quarter revenue of 50.8 billion yuan, a year-on-year increase of 700%, and posted a net profit of 25 billion yuan compared with a 1.6 billion yuan loss in the prior-year period. Industry trackers place CXMT as the world’s fourth-largest DRAM supplier with about 7.7% market share in 2025.
Its IPO prospectus lists major customers including Tencent, Alibaba Cloud, ByteDance, Lenovo and Xiaomi. The newly disclosed Tencent commitment would add to that customer base and, according to sources, CXMT is also in talks with other large Chinese internet companies about similar arrangements.
Capacity expansion plans
To capitalise on elevated prices and customer commitments, CXMT is expanding manufacturing capacity, the sources said. The company currently operates two 12-inch DRAM fabs in Hefei and one in Beijing with combined capacity of about 300,000 wafers per month. CXMT has begun construction of a new DRAM plant in Shanghai and maintains an existing Shanghai facility focused on HBM packaging.
Those projects and additional capacity are expected to increase DRAM wafer output to approximately 600,000 wafers per month, effectively doubling current production, according to all three sources. The expansion is presented as a direct response to the market upcycle and increased demand from Chinese cloud and internet customers.
Operational challenges
Despite rapid growth and large contracts, CXMT faces manufacturing and technology hurdles. One source noted the firm experienced low production yields on its DDR5 next-generation memory products during the first quarter, highlighting the persistent technology gap between CXMT and more established global players. The issue underscores execution risk as the company ramps new processes and scales capacity.
The reporting restated the exchange rate used in original coverage: $1 = 6.7982 Chinese yuan.
Conclusion
The multi-year supply commitment from Tencent, worth over 20 billion yuan, is a sizable commercial validation for CXMT at a pivotal moment ahead of a large public offering and aggressive capacity increases. The deal exemplifies how hyperscalers and cloud providers are securing memory supply through long-dated contracts amid a marked shortage and rising prices. At the same time, CXMT must address production yield shortfalls on next-generation products even as it scales to double wafer output.
Unanswered details
The parties have not publicly confirmed the arrangement. It remains unclear whether the supply includes HBM, what pricing or pre-payment terms apply, and what exact production volumes are committed annually. CXMT and Tencent did not respond to requests for comment.