Chinese memory chip makers flex pricing power as AI demand soars

China's memory chip manufacturers have evolved from government-subsidized loss-makers into dominant suppliers capable of dictating prices to the country's largest technology companies, according to a Reuters investigation.

ChangXin Memory Technologies (CXMT) and Yangtze Memory Technologies Corp (YMTC) now command such market power that they're charging premium prices—in some cases exceeding South Korean rivals Samsung and SK Hynix—as artificial intelligence infrastructure drives unprecedented demand for memory chips.

The shift became visible in June when CXMT expelled engineers from SiCarrier, a chipmaking equipment vendor with strategic ties to Huawei, from its core research and development facility in Hefei. The move followed months of escalating prices that Huawei had demanded relief from, according to two people familiar with the matter. The engineers, who had been assisting with equipment maintenance in CXMT's cleanrooms, were ordered to leave immediately and have not been allowed back into the R&D zone.

Why it matters

The pricing power shift signals a fundamental realignment in global semiconductor supply chains. Chinese memory makers are no longer competing on cost alone—they're leveraging domestic demand and capacity constraints to extract premium prices from buyers who have limited alternatives. This dynamic complicates U.S. export control strategies while accelerating China's push toward technology self-reliance in a critical component category.

Billion-dollar supply agreements

CXMT has secured major long-term contracts with Chinese technology giants. The company signed a five-year agreement with ByteDance worth more than $7 billion this month, according to three people familiar with the arrangement. A separate deal with Tencent in June exceeded $3 billion in value.

CXMT is preparing to launch an $8.6 billion IPO in Shanghai, having erased a decade of losses in six months. The company reported $7.5 billion in revenue for the first quarter—a 719% increase year-over-year. YMTC is also preparing for a public listing, with some executives internally pushing for a valuation target of 1 trillion yuan ($148 billion).

Premium pricing in tight markets

Chinese memory chips were historically viewed as cheaper alternatives to Western and South Korean products. That perception no longer holds. In recent weeks, CXMT has charged more than Samsung's roughly $1,240-per-unit price for comparable 64-gigabyte DDR5 server memory modules, according to two people familiar with pricing.

Several Chinese electronics and technology firms complained to China's Ministry of Industry and Information Technology this year about price increases from CXMT and YMTC, blaming the hikes for delaying product launches. The ministry said in April it would crack down on memory chip hoarding aimed at driving up prices.

Expansion plans and U.S. scrutiny

CXMT is building two new fabrication plants in Shanghai and Hefei and is in talks with local authorities about a third facility. These projects would more than double production capacity to over 600,000 wafers per month. If executed as planned, CXMT's capacity would overtake Micron by 2030, according to one person familiar with the plans.

The companies' growing market power has intensified debate in Washington. The Pentagon has designated both firms as Chinese military companies. YMTC is already on the U.S. Entity List, restricting its access to American suppliers and technology. Congress is debating further restrictions on chipmaking equipment access, though the Trump administration remains divided on enforcement.

Apple has argued it needs Chinese memory supply and has sought assurances that CXMT won't be added to the Entity List, according to two people familiar with discussions. CXMT was approved by a U.S. interagency committee last year for addition to the trade blacklist, but officials have held off on implementation.

Both Chinese chipmakers face technical constraints. They rely on deep ultraviolet lithography machines from Dutch manufacturer ASML, while competitors use more advanced extreme ultraviolet systems that China has been barred from obtaining since 2019. CXMT remains two generations behind rivals in high-bandwidth memory production for AI applications, according to five sources.

These details were first reported by Reuters based on interviews with more than a dozen executives, engineers, suppliers, and U.S. officials, along with a review of 50 Chinese government policy documents and company disclosures.