CXMT Signs Over RMB 20 Billion Server DRAM Supply Contract with Tencent
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CXMT has signed a long-term server DRAM supply contract worth over RMB 20 billion (~$2.94 billion) with Tencent, spanning up to three to five years. The deal provides commercial backing ahead of CXMT's blockbuster IPO and reflects a structural shift as cloud giants race to lock in memory capacity during a sharp upcycle.
What exactly was signed?
Reuters, citing three sources, reports that CXMT (长鑫存储) signed a server DRAM supply agreement with Tencent worth over RMB 20 billion (~$2.94 billion).
The contract term is disputed: two sources say up to three years; a third says up to five.
Key details remain unclear — including whether the deal covers HBM (high-bandwidth memory, a type of ultra-fast chip designed for AI and high-performance computing). Neither company commented.
Why sign now?
CXMT received Shanghai Stock Exchange approval in May to list on the STAR Market, targeting a raise of RMB 29.5 billion — potentially one of mainland China's largest IPOs in recent years.
This means → Tencent's large purchase commitment acts as direct commercial endorsement during the IPO window, signaling to investors that CXMT has locked-in, blue-chip demand.
CXMT is also in talks with Alibaba Cloud, ByteDance, Lenovo, and Xiaomi for similar deals. In plain terms = the more big-name contracts CXMT secures before listing, the stronger the case for its IPO valuation.
What is happening in the DRAM market?
UBS data shows DRAM contract prices rose roughly 95% quarter-on-quarter in Q1 2026. UBS expects the upcycle to last through at least late 2027.
The global memory market is projected to reach $786 billion this year and could climb to $1.2 trillion by 2027.
This reflects a structural shift: major cloud companies are locking in supply through three-to-five-year contracts, with some committing over 50% of their procurement to long-term deals with prepayment terms. The Tencent–CXMT contract is a direct expression of this trend.
How dramatic is CXMT's financial turnaround?
CXMT is now the world's fourth-largest DRAM maker, holding roughly 7.7% market share in 2025.
Q1 2026 revenue hit RMB 50.8 billion, up 700% year-on-year. Net profit reached RMB 25 billion, versus a RMB 1.6 billion loss in the same quarter a year earlier.
This means → CXMT flipped from loss-making to massive profitability in a single quarter — the memory upcycle's amplification effect on this company is extraordinary.
How aggressively is CXMT expanding capacity?
CXMT operates two 12-inch DRAM fabs in Hefei and one in Beijing, with combined monthly capacity of roughly 300,000 wafers.
Beyond its existing Shanghai HBM packaging plant, CXMT has begun building a new DRAM wafer fab in Shanghai. Once completed, total monthly DRAM wafer capacity will roughly double to 600,000.
In plain terms = CXMT is betting on the upcycle by doubling its production capacity outright.
Has the technology gap closed?
Sources say CXMT experienced low yields on its next-generation DDR5 memory products in Q1 2026.
The technology gap with global leaders Samsung Electronics and SK Hynix has not been bridged.
This reflects CXMT's core tension: capacity and orders are scaling fast, but the technology is still catching up. Whether it can raise yields while simultaneously doubling output is the key variable determining if this growth cycle is sustainable.
Content is for reference only, not financial advice.