CXMT Will Not Save Us from Memory Prices, Has Already Closed Contracts and Saturated Production

The demand for memory intended for artificial intelligence continues to increase, leading major manufacturers to bind a large part of their production capacity through long-term contracts. According to information reported by Reuters, CXMT (ChangXin Memory Technologies) has reached an agreement with Tencent for the supply of memory with an overall estimated value of up to 20 billion dollars, distributed over a period of three to five years.

The agreement represents a further signal of the increasing pressure on the DRAM market, fueled by the rapid spread of AI applications in China. The country is massively investing in the sector and seeing a growing number of companies dedicated to the development of artificial intelligence solutions. This scenario increases the demand for computing capacity, dedicated infrastructure, and especially for high-performance memory.

CXMT takes on a central role in the Chinese DRAM memory supply chain and, in recent weeks, several rumors had indicated possible interest from Apple in its products. The basis of this hypothesis would be the difficulties faced by Samsung, SK hynix, and Micron in meeting demand, as a significant portion of their production is already allocated to customers who have signed multi-year agreements.

The agreement with Tencent demonstrates that even CXMT is adopting the same commercial policy. The company seems directed towards reserving a significant portion of its production through long-term contracts, a choice that limits the availability of memory in the free market and will contribute to maintaining high pressure on supply.

At the moment, no details have emerged about the type of memory that will be supplied. In the AI sector, the choice often falls on HBM (High Bandwidth Memory), due to its high bandwidth, but recently, LPDDR has also gained more relevance for executing workloads related to agent-based AI, thanks to higher capacities and, above all, better energy efficiency. It is not excluded that the agreement could include a combination of both.

The news also helps to downgrade the idea that CXMT could represent a significantly cheaper alternative compared to major international manufacturers. The company indeed follows a commercial strategy similar to that of its competitors, favoring multi-year agreements with billion-dollar value with prioritized customers. According to rumors, CXMT is also preparing for a stock market listing, which could clarify the details of these operations in the coming months.