For months, Chinese chip manufacturer ChangXin Memory Technologies (CXMT) had been hiking prices on Huawei, one of the country’s biggest technology companies. The chipmaker held firm when Huawei demanded relief from the escalating costs, according to two people familiar with the matter. The standoff came to a head on CXMT’s factory floor in June.
A group of engineers from a chipmaking-equipment vendor with deep strategic ties to Huawei had been working in the cleanrooms at CXMT’s core research and development zone in Hefei, Anhui province. Without warning, CXMT ordered the engineers, who had been helping with equipment maintenance, to pack their tools and leave the factory floor immediately, the two sources said. Executives at the Huawei-connected equipment vendor, SiCarrier, concluded the confrontation was the result of the power struggle between CXMT and Huawei, the people told Reuters.
The companies still do business, but the engineers haven’t been allowed back into the R&D zone, the two people said. CXMT, Huawei and SiCarrier didn’t respond to questions about the incident. The clash illustrates the changing dynamics of China’s semiconductor industry.
CXMT has risen to become the world’s fourth-biggest maker of memory, including the DRAM variety used in smartphones, laptops and servers. Now, the company is powerful enough to charge prices even Huawei can’t stomach. Memory chips that help devices run apps and store files were once a low-margin business.
CXMT and its flash-memory counterpart, Yangtze Memory Technologies Corp, or YMTC, spent years relying on government funding and racking up losses. Read: China considers tighter export controls on AI models and chips, FT reports But the global buildout of AI data centers has transformed the humble components into one of the world's most sought-after products, sparking battles over pricing and a scramble for supply. The Chinese memory makers are now picking clients and dictating prices, four people familiar with the matter told Reuters.
In some cases, they are charging more than their larger South Korean rivals, Samsung and SK Hynix, as skyrocketing demand for memory chips forces Chinese buyers to pay ever-higher prices. CXMT this month signed a five-year agreement with ByteDance, TikTok’s Chinese owner, worth more than $7 billion, three people familiar with the arrangement told Reuters.
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