On a sprawling campus in the eastern Chinese city of Hefei, construction workers are racing to complete a new production line for ChangXin Memory Technologies, a state-backed company that until recently was little known outside China’s semiconductor industry.
CXMT has been thrust into the global spotlight by the race for memory chips. Apple has begun testing the company’s DRam chips for devices sold in China, according to two people familiar with the matter, as the iPhone maker leads a lobbying effort among US tech companies to get the US government to allow broader use of the company’s products.
The interest in CXMT marks a sharp turnaround for a company that spent nearly a decade burning through billions of dollars but has now become central to Beijing’s efforts to build a domestic AI supply chain — and is poised to become one of the most profitable technology companies to be listed on China’s domestic stock market.
“China has very high expectations of CXMT,” said Emory Tsai-Yi Wang, a fellow at the Taipei-based Research Institute for Democracy, Society and Emerging Technology. “It emerged as the leader in the race to find a local memory chip champion and is critical to the nationwide project to build a self-sufficient AI supply chain.”
The memory shortage has transformed CXMT’s finances. Its net profit soared to Rmb33bn ($4.8bn) in the first quarter of this year, according to its IPO prospectus — a striking reversal from the Rmb37bn ($5.4bn) in losses it has accumulated over the past decade.
CXMT is now the world’s fourth-largest producer of DRam — the chips used in everything from smartphones to servers — behind SK Hynix, Samsung Electronics and Micron.
It accounted for about 11 per cent of global DRam wafer capacity last year, according to SemiAnalysis, a figure expected to rise to 15 per cent by 2028 as new production lines come online in Hefei, Shanghai and Beijing.
For US tech groups competing over a finite global supply of DRam wafers, the prospect of a fourth global supplier in China is appealing but politically sensitive.
Apple has previously faced public pushback from US policymakers when it last explored using Chinese memory suppliers, including then Republican senator Marco Rubio, who flagged security risks in 2022.
Apple declined to comment on whether it was testing CXMT’s chips for devices sold in China.
Despite CXMT’s rapid growth and plans to increase production, analysts say additional Chinese supply is unlikely to ease memory chip prices soon, as virtually all of its output is already committed and demand continues to grow.
“There’s a misconception that Chinese memory is dramatically cheaper and will flood the market,” said Ray Wang, memory analyst at SemiAnalysis. “Capacity is extremely constrained. Even as CXMT expands, it will remain supply constrained for at least the next two years.”
Over the longer term, however, competitors fear a repeat of the pattern seen in Chinese industries from solar panels to electric vehicles: years of state-backed investment followed by rapid capacity expansion and falling prices that squeeze foreign rivals.
CXMT declined to comment.
Although CXMT is celebrated as a national tech champion, its origins are rooted in foreign technology. In 2016, Zhu Yiming, a Silicon Valley returnee who had founded GigaDevice, a fabless flash memory maker, began a Hefei government-backed project to build domestic fabs and cut the country’s reliance on foreign imports.
In 2019, it acquired critical patents from a bankrupt German company, called Qimonda, which according to SemiAnalysis “became the basis” of CXMT’s DRam business. It also hired key personnel from the German company and recruited heavily from Korea and Taiwan. This year, Korean prosecutors sentenced a former Samsung researcher for leaking chip technology to CXMT.
CXMT also developed a close relationship with Dutch lithography group ASML, whose deep ultraviolet (DUV) machines remain essential to its manufacturing process despite Beijing’s push to localise semiconductor equipment. CXMT has not been added to the US Entity List so can still buy China-approved equipment from ASML.
Outside the company’s headquarters, a “friendship garden” founded in 2024 commemorates its partnership with ASML with a sign depicting the two companies shaking hands.
Much of CXMT’s rise reflects its close relationship with the local government, which has spent years cultivating the company as the centrepiece of a local semiconductor ecosystem.
Analysts estimate that the government supplied cheap land for CXMT’s vast campus, provided financing and subsidies, and helped attract suppliers and customers to the city, creating an industrial cluster around CXMT. Between 2023 and 2025, CXMT received at least Rmb6bn ($880mn) in government subsidies, according to its financial disclosure.
CXMT has at least 15 state-owned shareholders, which collectively own 36 per cent of the company. Many of its privately owned funds also have backing from state-owned limited partners.
“Much of the support is intangible,” DSET’s Wang said. “The Hefei government likely helped connect CXMT with suppliers and customers, including local automakers. Those relationships were critical.”
The IPO will provide a boon for Hefei’s investors. Analysts expect that CXMT’s valuation could soar to as much as Rmb3tn after listing. If achieved, this would imply gains of more than Rmb1tn for Hefei — roughly equivalent to the city’s annual GDP.
CXMT’s standing among Hefei’s other tech groups, from AI group iFlytek to carmaker Nio, has risen sharply in the past year. “Everyone wants to join CXMT now. In the past, it wasn’t considered as prestigious as iFlytek,” said one Hefei-based engineer. Last year, it added about 6,000 people, taking its headcount to 20,000 employees.
CXMT disclosed in its IPO prospectus that it plans to raise Rmb29.5bn for upgrading its manufacturing processes, R&D for “next generation” DRam technology and hiring top engineering talent, including from overseas.
The company’s campus reflects both its strategic importance and its secrecy. Many employees live in apartments on or beside the site. Personal mobile phones are banned inside offices, a common practice in tech companies with sensitive technology. During a visit by the FT, guards stopped reporters photographing the heavily fenced complex, describing it as a “confidential compound”.
While its DRam business has made CXMT profitable, a bigger test will be whether it can crack the high-bandwidth memory (HBM) market.
CXMT did not mention its nascent HBM business in its IPO prospectus, which it recently entered and remains a tightly guarded secret. HBM is the most valuable form of memory used in AI accelerators, an area in which it remains far behind the three market leaders.
The Chinese group has allocated some of its new production lines, including in Shanghai, to HBM, but usage in China remains limited, analysts say. Chinese AI groups stockpiled large amounts of Korean HBM ahead of a ban in 2024, while supplies have continued to enter the country through smuggling routes, according to multiple people familiar with the matter.
CXMT also faces a higher cost of production for HBM than its foreign rivals because it has been barred from buying ASML’s cutting-edge EUV machines, which simplify the patterning of extremely small features on the silicon wafer.
“The restrictions on CXMT buying EUV have impacted its HBM business. Yield rates remain low, and it creates barriers to Chinese companies adopting the technology when CXMT is running trial-and-error runs to improve this,” said DSET’s Wang.
Yet few industry experts doubt Beijing’s commitment to developing the technology, despite the higher costs. Profits from conventional DRam, together with proceeds from the forthcoming IPO, are expected to fund a multiyear push into HBM.
“Chinese AI companies will adopt CXMT’s memory because they share the same strategic objective,” added DSET’s Wang. “China has concluded that self-sufficiency is ultimately more important than relying on foreign suppliers. CXMT has become central to that ambition.”
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