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China's Memory Chipmakers Bolster Pricing Power Amid AI Demand Surge
Chinese memory chipmakers are raising prices on key customers like Huawei, signaling a shift in market power within the semiconductor industry. This comes as AI data centers drive demand for memory, transforming what was once a low-margin component.
CXMT Challenges Huawei on Pricing
Chinese chip manufacturer ChangXin Memory Technologies (CXMT) has increased prices for Huawei, one of China's largest technology companies, over several months. CXMT maintained its pricing stance even as Huawei sought relief from rising costs, according to two individuals familiar with the situation.
The pricing dispute escalated into a direct confrontation at CXMT's factory in June. Engineers from a chipmaking equipment vendor, closely tied to Huawei, were working in the cleanrooms of CXMT's core research and development facility in Hefei, Anhui province. CXMT abruptly directed these engineers to pack their tools and vacate the factory floor, the same sources indicated.
Executives at SiCarrier, the Huawei-affiliated equipment vendor, concluded the incident stemmed from a power struggle between CXMT and Huawei. Despite the conflict, both companies continue their business relationship, though the engineers involved have not been allowed back into the research and development zone, according to the sources. Neither CXMT, Huawei, nor SiCarrier commented on inquiries regarding the incident.
Shifting Industry Dynamics
This clash reflects changing power dynamics within China's semiconductor sector. CXMT has emerged as the world's fourth-largest memory maker, including DRAM used in smartphones, laptops, and servers. The company's market position is now strong enough to dictate pricing, even with a major customer like Huawei. Memory chips, essential for running applications and storing data on devices, were historically a low-margin business.
However, the global expansion of AI data centers has redefined these components, turning them into highly coveted products. This shift has ignited intense competition over pricing and supply availability. CXMT's flash-memory counterpart, Yangtze Memory Technologies (YMTC), also previously depended on government funding and operated at a loss for years. Now, both companies benefit from a transformed market where their products are in high demand.
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