Reuters reported on June 29, citing three sources, that ChangXin Memory Technologies (CXMT) has signed a long-term supply agreement with Tencent Holdings, with a value of over RMB 20 billion (about $2.94 billion), mainly covering the supply of server DRAM memory chips for the next few years. The agreement has a maximum term of three to five years. Tight global DRAM supply and rising prices are driving cloud companies to lock in supply through long-term agreements.
Known Terms and Undisclosed Details of the Agreement
According to information from the sources cited by Reuters, the agreement has a maximum term of three to five years and mainly covers server DRAM chips. Whether the agreement includes CXMT's high-bandwidth memory (HBM) products is not yet clear. Reuters also cited two sources saying that CXMT is in talks with other large Chinese internet companies about similar long-term supply agreements, with details yet to be disclosed.
Approval Process for the STAR Market IPO of ChangXin Memory
CXMT's STAR Market IPO has completed the following procedures: its application passed the review of the Shanghai Stock Exchange's listing committee, and it has obtained registration approval from the China Securities Regulatory Commission (CSRC). CXMT plans to raise RMB 29.5 billion, which would be the highest proposed fundraising amount in the history of STAR Market IPOs, and it is also the first STAR Market IPO to be processed via a pre-review method. The specific timetable and pricing of the IPO have not been announced.
SemiAnalysis Forecast Data on CXMT's Capacity Expansion
Market research firm SemiAnalysis's forecasts for CXMT's capacity expansion are as follows:
2025: DRAM market share of approximately 11% to 13%
2027: Monthly capacity of about 420,000 wafers, with market share forecast to rise to about 17%
2028: Monthly capacity further increases to about 500,000 wafers, with market share maintaining at about 17% (taking into account the simultaneous expansion of global DRAM total capacity)
The above data are SemiAnalysis forecasts and are not official capacity plans from CXMT or Tencent.
Frequently Asked Questions
How does CXMT's market share compare with the top global DRAM manufacturers?
According to SemiAnalysis forecast data, CXMT's DRAM market share in 2025 is approximately 11% to 13%. The global DRAM market is currently dominated by three manufacturers: Samsung, SK Hynix, and Micron. CXMT is the largest DRAM memory manufacturer in China.
Why did Tencent choose to sign a long-term agreement instead of purchasing DRAM on the spot market?
Global DRAM supply is tight, spot prices are trending up, and demand for server memory from cloud computing, artificial intelligence, and data center operations continues to grow. Through long-term agreements (LTA), companies can achieve supply stability and cost predictability. Currently, other internet and cloud companies are also locking in supply through similar methods.
What impact does this signing have on the timeline of CXMT's STAR Market IPO?
Reuters reports believe that, on the eve of the IPO, obtaining a long-term order worth more than RMB 20 billion from Tencent represents public recognition of CXMT's technical capabilities by one of China's largest internet companies. As of the time of the report, the specific IPO timetable and pricing for CXMT had not been announced, and the related procedures are still being advanced through the normal approval process.
