Against the backdrop of a global shortage of memory chips, ChangXin Memory Technologies (CXMT), a prominent domestic memory manufacturer, is grappling with constrained production capacity. This limitation makes it challenging for CXMT to assert its dominance in the international market. In a bid to stabilize its memory supply chain, Apple is seeking approval to procure DRAM memory chips from CXMT—a company currently on the U.S. Entity List—as a means to sidestep export control restrictions. However, even if Apple’s application is greenlit, the collaboration between the two entities is fraught with obstacles, making it unlikely for Apple to secure ample quantities of qualified chips in the near term.

Concurrently, domestic memory production capacity is undergoing a shift, moving away from mobile-centric LPDDR chips towards DDR memory products that are more aligned with domestic requirements. This transition prioritizes the capacity expansion needs of local servers, major internet firms, and smart terminal manufacturers. Consequently, the domestic DRAM supply has tightened, causing disruptions to the production schedules of certain local smartphone companies.

In light of these developments, pertinent Chinese authorities and key domestic customers are inclined to prioritize CXMT’s production capacity allocation to domestic manufacturers, thereby safeguarding the supply rights of local enterprises. CXMT has already inked a long-term supply agreement valued at $3 billion with Tencent and is engaged in discussions with other leading Chinese internet companies for potential collaborations. These moves further diminish CXMT’s capacity to cater to the international market.

This scenario underscores a defining characteristic of China’s memory industry: a preference for catering to domestic demand. Production capacity resources are primarily directed towards ensuring the safe and stable operation of the local digital industry.