CXMT secures $2.94B Tencent deal ahead of $4.3B Shanghai IPO

A $2.94 billion DRAM supply deal with Tencent gives CXMT a marquee customer just weeks before its planned $4.3 billion Shanghai IPO.

ChangXin Memory Technologies has signed a long-term agreement to supply Tencent Holdings with more than 20 billion yuan ($2.94 billion) worth of server DRAM chips, three people with knowledge of the matter said, in what would be one of the largest procurement commitments between a Chinese internet company and a domestic chipmaker.

The multiyear contract covers dynamic random-access memory for servers that power cloud computing and AI workloads, the people said, asking not to be identified because the terms are private. Two of the sources said the deal spans up to three years, while a third said it covers as many as five. It remains unclear whether the agreement includes CXMT's high-bandwidth memory, a critical component in advanced AI chips.

"This deal validates CXMT's ability to serve China's largest hyperscalers at scale," said a semiconductor supply chain analyst who declined to be named because they are not authorized to speak publicly. "For Tencent, locking in domestic DRAM supply is both a cost hedge and a supply-chain security move."

The agreement comes as CXMT prepares for a blockbuster initial public offering on the Shanghai Stock Exchange's STAR Market. The company received exchange approval in May for an IPO aiming to raise 29.5 billion yuan ($4.3 billion) through the sale of as many as 10.6 billion shares, which would be one of mainland China's largest listings in years. Tencent, Alibaba Cloud, ByteDance, Lenovo Group and Xiaomi are listed as major customers in CXMT's prospectus.

Explosive Growth in a Tight Market

CXMT, the world's fourth-largest DRAM maker with about 7.7% market share in 2025, has ridden a historic memory upcycle to explosive growth. First-quarter revenue hit 50.8 billion yuan ($7.4 billion), up 700% from a year earlier, while net profit swung to 25 billion yuan from a 1.6 billion yuan loss. DRAM contract prices surged roughly 95% quarter-on-quarter in the first three months of 2026, according to UBS, which forecasts 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, the investment bank estimates.

Long-term supply agreements with price bands and pre-payments have become standard across the industry as cloud companies seek to lock in supply, with some committing more than 50% of their volumes over three-to-five-year terms, a UBS note said.

Doubling Capacity, Closing the Gap

CXMT is aggressively expanding production to capitalize on the upcycle. The Hefei-based company currently operates two 12-inch DRAM fabrication plants in Hefei and one in Beijing, with combined capacity of about 300,000 wafers per month. It has begun building a new DRAM plant in Shanghai that, together with other capacity additions, will double output to approximately 600,000 wafers per month, three sources said.

The company, however, still faces a technology gap with global leaders Samsung Electronics and SK Hynix. CXMT experienced low production yields on its DDR5 next-generation memory products in the first quarter, one source said, a reminder of the challenges in matching the process technology of established players.

The Tencent deal signals that Chinese internet giants are willing to bet on domestic alternatives even as the technology gap persists. Apple has also sought US approval to buy from CXMT as memory prices have quadrupled, according to reports, while CXMT has been supplying DDR5 to Western brands including Corsair at competitive prices.

Investment Angle

CXMT's IPO is expected to draw strong demand given the company's revenue trajectory and the strategic importance of domestic memory production. The company's first-quarter annualized revenue run rate of roughly 200 billion yuan would value it at about 15 times forward sales at the top of its IPO range — a discount to Samsung's 22 times and SK Hynix's 18 times, reflecting the technology gap and geopolitical risks. CXMT is also in discussions with other major Chinese internet companies for similar long-term supply deals, two additional sources said, suggesting the Tencent agreement may be the first of several anchor contracts that underpin the company's growth story.

This article is for informational purposes only and does not constitute investment advice.