Last month, Tsai-Yi Wang, Non-Resident Fellow in DSET’s Economic Security Research Program, published a research report “The Rise of CXMT: Inside the Hydra-like Chinese Memory Sector.” The report examines the rapid development of China’s memory industry in recent years through the case of ChangXin Memory Technologies (CXMT).
Building on DSET’s previous report, “The Great Siege: The PRC’s Comprehensive Strategy to Dominate Foundational Chips,” this new study further analyzes China’s “national team” in the memory sector. The report provides a detailed account of how local governments support local enterprises, and how CXMT, initially a local champion, continuously upgraded its technology amid the U.S.–China tech competition and was ultimately selected to join the national team.
Key Conclusions and Recommendations
Currently, the Chinese memory firm CXMT is challenging the landscape of the memory industry, which is dominated by the “big three” memory giants—SK hynix, Micron, and Samsung. By the first quarter of 2025, it had captured a 6% share of the global DRAM market. Moreover, it is likely that the production experience will allow CXMT to both expand its shipments and improve its technology, narrowing the gap between CXMT and the big three.
Beyond its rising market share, CXMT reportedly delivered HBM3 samples to industry partners in late October this year, which may help Huawei overcome bottlenecks in AI-used memory. To respond to China’s advances in the memory sector, the report offers two policy recommendations.
Recommendation 1: Large-scale additions to entity lists
The report urges techno-democracies to impose export restrictions on CXMT and other Chinese memory firms to prevent them from leveraging knowledge gained from blacklisted entities and benefiting from concentrated resources.The report finds that if export controls target only individual Chinese firms, they may inadvertently benefit domestic competitors, ultimately failing to hinder the development of the Chinese semiconductor industry.
Although CXMT has been repeatedly considered for placement on the U.S. Commerce Department’s BIS Entity List since 2023, it has not yet been designated. Given CXMT’s rapid expansion of its DRAM market share and its development of HBM technologies, the report recommends that the U.S. and Taiwanese governments target CXMT with entity-oriented export controls, paired with large-scale additions to close potential loopholes.
Recommendation 2: Reviewing and Restricting Technology Transfers and Investments
The report recommends that techno-democracies conduct a thorough review of their existing critical technologies and regulate the transfer of such assets. The report finds that in 2019, CXMT purchased more than 7,000 European patents, allowing it to establish a solid technological foundation for its memory products. Although the EU issued the Recommendation on Critical Technology Areas for the EU’s Economic Security in 2023, the document only broadly identifies four categories of technologies relevant to economic security and does not carry regulatory force.
In addition, it is necessary to strengthen both inbound and outbound investment screening systems to further secure critical technologies. In recent years, China has acquired European companies to obtain their technologies, with Wingtech’s acquisition of Nexperia being a notable example. To safeguard strategic industries, the EU introduced a joint investment screening framework in 2020, encouraging member states to report foreign investment cases and allowing other members to provide feedback. The report argues that although the EU’s current investment screening mechanism lacks binding authority, it can still be effective if economic security is firmly upheld as the core principle of review.
Key Finding 1: The Collaboration Among the Local government, GigaDevice, and CXMT
Hefei, the uncommon birthplace of CXMT, is a city that only began developing the tech industry in the past two decades. Despite its late start, Hefei has already produced tech giants in the display panel, driver IC, and memory chip sectors. To break into the memory market, the Hefei municipal government partnered with the flash memory company GigaDevice in 2016 to establish CXMT.
This report analyzes the collaboration among the Hefei government, GigaDevice, and CXMT in three dimensions:
- Investment: The entity that invested in CXMT was Hefei Industrial Investment Holding (HIIH). Of the 18 billion RMB in initial capital, GigaDevice only needed to contribute 20%, while the remaining 80% was supplied by HIIH.
- Industry: In recent years, GigaDevice has shifted its focus from flash memory to MCUs. By maintaining GigaDevice’s fabless model alongside CXMT’s IDM structure, the two companies effectively leverage CXMT’s production capacity.
- Collaboration: GigaDevice not only provided core technologies and capital during CXMT’s early phase, but it also remains deeply involved in CXMT’s operations through Zhu Yiming, who is the founder of GigaDevice and the CEO of CXMT.
Key Finding 2: CXMT Navigated Export Restrictions by Learning from the Case of JHICC and Utilizing Foreign Foundations
Under geopolitical tension, CXMT leveraged domestic and foreign resources to make breakthroughs. The report finds the Micron v. JHICC case inadvertently affected the development of the Chinese memory industry: JHICC was nearly shut down by the U.S. restrictions, which not only brought CXMT both central and private investment but also helped the company to learn from JHICC’s downfall and carefully navigate around U.S. red lines.
CXMT rapidly boosted China’s memory R&D and production by acquiring foreign patents and recruiting overseas talents. In its early years, CXMT purchased thousands of DRAM patents from Qimonda, a German DRAM company that had long gone bankrupt. Based on these assets, CXMT launched its first DDR4 product in 2019. In addition, CXMT poached hundreds of engineers from Taiwanese memory firms with local intermediaries, posing a serious issue to the Taiwanese memory industry.
Memory Is the Pivot of Tech Competition
Memory may appear to be a minor front in the broader technology competition, but the rise of CXMT offers vital economic security lessons. The sector’s strategic role in enabling advanced AI systems means that losing dominance here would have cascading effects across multiple domains. To secure technological leadership, techno-democracies must confront the rapid ascent of China’s memory industry now.
