June 29 (Reuters) – Chinese memory chipmaker ChangXin Memory Technologies (CXMT) has signed a long-term supply agreement with Tencent Holdings (0700.HK), worth more than 20 billion yuan ($2.94 billion) ahead of its blockbuster stock market debut, according to three people with knowledge of the matter.
The agreement covers several years of DRAM chip supply for servers, the people said, speaking on condition of anonymity as the details are private. Two of the sources said the deal spans up to three years, while the third said it covers up to five years.
DRAM, or dynamic random-access memory, is a critical component for servers that power cloud computing, databases and AI workloads. Modern data centres need DRAM to run applications without bottlenecking, making long-term supply contracts a priority for companies amid a prolonged global shortage that has led to soaring memory chip costs.
Further details of the deal were not immediately clear, including whether it includes CXMT’s high-bandwidth memory (HBM), an essential component in high-performance AI chips.
CXMT and Tencent didn’t immediately respond to requests for comment.
Founded in 2016 with government backing, CXMT leads China’s strategic push to build a foothold in a global DRAM market dominated by South Korean and U.S. companies.
The previously unreported deal comes at a critical juncture for CXMT, which received approval from the Shanghai Stock Exchange in May for an initial public offering on the STAR Market that aims to raise 29.5 billion yuan, setting it up to be one of mainland China’s largest listings in years.
The size of the commitment from one of China’s biggest internet companies represents a major endorsement of the Hefei-based firm, which has long been viewed as a technological laggard compared with global leaders Samsung Electronics (005930.KS), and SK Hynix (000660.KS).
CXMT is also in discussions with other major Chinese internet companies on similar collaborations, two additional sources said. It counts Tencent, Alibaba Cloud (9988.HK), ByteDance, Lenovo (0992.HK), and Xiaomi (1810.HK), as major customers, according to its IPO prospectus.
EXPLOSIVE GROWTH
The Tencent deal reflects a broader shift in China’s technology supply chain, as domestic internet giants scramble for memory chip supply amid a global shortage.
DRAM contract prices surged roughly 95% quarter-on-quarter in the first quarter of 2026, according to UBS, with the investment bank forecasting the memory upcycle to continue until at least late 2027. The global memory market could reach $786 billion this year and $1.2 trillion in 2027, UBS estimates.
CXMT, the world’s fourth-largest DRAM maker with approximately 7.7% market share in 2025, has ridden the upcycle to explosive growth. Its first-quarter revenue hit 50.8 billion yuan, up 700% year-on-year, while it recorded a net profit of 25 billion yuan, compared with a 1.6 billion yuan loss a year earlier.
Long-term agreements with price bands and pre-payments have become increasingly common across the industry as large cloud computing companies — known as hyperscalers — seek to lock in supply, with some committing more than 50% of their volumes over three-to-five-year terms, the UBS note said.
DOUBLING CAPACITY
CXMT is aggressively expanding production capacity to capitalise on the upcycle, according to two of the sources and an additional source.
In addition to its existing Shanghai facility focused on high-bandwidth memory (HBM) packaging, CXMT has begun building a new DRAM plant in the city, two of those sources said.
CXMT currently has two 12-inch DRAM fabrication plants — or fabs – in Hefei and one in Beijing, with a combined capacity of about 300,000 wafers per month.
With the new Shanghai facility and other new capacity, CXMT will double its DRAM wafer output to approximately 600,000 wafers per month, all three sources added.
The company, however, faces challenges. CXMT experienced low production yields on its DDR5 next-generation memory products in the first quarter, one of the sources said, a reminder of the technology gap that still separates it from established global players.
($1 = 6.7982 Chinese yuan)
Reporting by Reuters newsrooms; Editing by Kevin Buckland.
