Memory and logic chips are the cornerstone of modern AI technology. While the memory market once mainly followed economic cycles, rising AI demand has reshaped its strategic importance. As AI relies on massive data processing, memory has become a critical battleground in tech geopolitics.
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.
This report serves as a prequel, revealing the early days of CXMT: How it manage to distinguish itself from multiple semiconductor projects a decade ago and how it has remained active on the global stage despite mounting U.S. restrictions.
Part 1. Local Government Built CXMT with the “Hefei Model”
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. Hefei strategically invests in industries with broad market needs, then reinvests the returns into the next wave of industrial projects. To enter the memory market and establish CXMT, Hefei collaborated with flash memory company GigaDevice, which plays a critical role as it provides technology, talent, and management support to CXMT.
Part 2. CXMT Navigated Export Restrictions by Learning from the Case of JHICC and Utilizing Foreign Foundations
The report argues that CXMT leveraged domestic and foreign resources to make breakthroughs under geopolitical tension. First, 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.
Second, 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.
Policy Recommendations
To counter China’s progression in the memory industry, the report suggests enhancing the export controls system, as well as protecting critical technologies. First, 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. Second, the report recommends that techno-democracies conduct a thorough review of their existing critical technologies and regulate the transfer of such assets. Finally, it is necessary to strengthen both inbound and outbound investment screening systems to further secure critical technologies.
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.
