Executive Summary
When China’s state-backed chipmaker Changxin Memory Technologies (CXMT) made its initial public offering (IPO) on July 27, it became China’s largest publicly traded company by market capitalization. Since late last year, CXMT has benefitted from an acute shortage of high bandwidth memory (HBM) and dynamic random-access memory (DRAM) chips, enabling a surge in profits. However, some analysts predict that rapid growth driven by artificial intelligence (AI) will cool off by late 2027. CXMT’s rapid growth may exert pressure on the market power and profit margins of incumbent memory chipmakers Samsung, SK Hynix, and Micron, especially once the current boom cools. All three firms are investing heavily to stay ahead, but CXMT’s rising share of the general DRAM market may make cut-throat competition unavoidable in a sector of geostrategic importance to the US and its allies.
Introduction
Three firms dominate 90 percent of the market for dynamic random-access memory (DRAM) chips: South Korea’s Samsung and SK Hynix and US-based Micron Technology. DRAM chips are vital for consumer electronics and AI data centers. High bandwidth memory (HBM) chips, a certain type of complex DRAM application, are essential to the AI revolution, as they complement the microprocessor “brain” chips in AI accelerators and other AI-enabling hardware. Demand for both general DRAM chips and their more complex and cutting edge HBM subcategory have far outstripped supply, leading to surging profits for both incumbent firms and China’s state-backed upstart, Changxin Memory Technologies (CXMT) (Pan & Chen, 2026).
Samsung and HBM-leader SK Hynix have pivoted from general DRAM to HBM to meet demand, thereby creating an opening for CXMT in the general DRAM market. Heavily subsidized CXMT was unprofitable every year from its 2016 founding until 2025 (Caixin, 2026). However, over the past year CXMT’s revenue has surged by 719 percent, with profits reaching RMB 33 billion in Q1 2026 alone (Howard Liu, 2026). As ChosunBiz reported, CXMT’s recent surge has been so meteoric that “the company wiped out 36.6 billion yuan in cumulative losses since its founding in a single quarter” (Hwang, 2026).
CXMT’s Shanghai Stock Exchange’s science and technology-focused STAR Market IPO has only accelerated the firm’s rapid rise, vaulting it to first place among all of China’s publicly-traded companies (Bloomberg, 2026; CompaniesMarketCap.com). CXMT says it plans to invest USD 1.8 billion of the IPO capital in DRAM research and development, while another USD 1.26 billion will be deployed for “advanced process research and development” – a direct challenge to the high bandwidth memory dominance of the SK Hynix, Samsung, and Micron (Hwang, 2026). China’s economic planning agency, the National Development and Reform Commission, has steered domestic chip firms to buy CXMT chips, creating an all-but-captive market to underwrite CXMT’s expansion (Potkin & Freifeld, 2026). But CXMT’s full impact on the global DRAM ecosystem may not be felt until late 2027, when the global DRAM shortage eases and price becomes a more salient factor for cloud services and electronics, potentially enabling state-backed CXMT to cut prices further than US and Korean competitors and substantially grow its market share.
Analysis
Amidst its rapid growth over the past year, CXMT’s global market share has risen from less than 4 percent to around 8 percent (Hwang, 2026). The DRAM chip shortage has been so acute that some US firms, including Apple, have begun testing CXMT for sold-in-China products despite the US Department of War’s recent redesignation of CXMT as a “Chinese military company” (Freifeld, 2026; Berman, 2026; Zhiye Liu, 2026; Sevastopulo & Action, 2026; Tanna, 2026). Even if scrutiny from powerful US officials (including Secretary of State Marco Rubio) ultimately prevents US firms from purchasing CXMT chips—as it did in 2022—China’s vast domestic demand for DRAM and HBM chips leaves CXMT in a position to continue its rapid growth over the coming months (Berman, 2026; Sherry Wang, 2026b).
Though technical and geopolitical obstacles remain, CXMT’s ongoing capacity expansion has demonstrated that when market imperatives and China’s technological self-reliance goals align, the result can be explosive growth. Moreover, CXMT appears to be on the cusp of commercializing HBM3 technology, which is only one generation behind the HBM technological frontier, thus allowing the company to directly challenge SK Hynix, Samsung, and Micron in a lucrative market previously protected by high technological barriers to entry by around 2028 (Shilov, 2026; Semianalysis, 2026).
The big three have taken notice. In its most recent US Securities and Exchange Commission (SEC) filing, Micron mentioned increased competition from state-backed Chinese firms including CXMT and fellow memory chipmaker Yangtze Memory Technology Co. (YMTC) as a factor in future profitability (Berman, 2026). YMTC, which specializes in a different type of memory chip called NAND Flash, also recently began the IPO process and may debut on the Shanghai Stock Exchange a few months after CXMT (Pan et al, 2026). The same aforementioned big three memory chip firms dominant in DRAM also lead the NAND Flash market, meaning that CXMT and YMTC may together put substantial price and market share pressure on the two primary types of chips the established foundries produce in the medium to long-run. (Sherry Wang, 2026a).
In the near-term, the severe shortage of DRAM and especially HBM chips mean that CXMT’s expanding market share will not directly harm the incumbent Korean and US memory chipmakers (Sherry Wang, 2026a). All firms will likely continue to make substantial profits. However, semiconductor manufacturing is a cyclical industry (Pan & Chen, 2026). As the first wave of the AI-fueled data center buildout slows and chipmakers’ investments in new capacity come online, supply will grow to meet demand by around late 2027 (Howard Liu, 2026). If the current AI boom is a bubble or enters a protracted correction, the current cycle could end with substantially lower demand. In a cooling environment, today’s robust margins for both the incumbents and CXMT could tighten, potentially leaving subsidized CXMT at an advantage in the general DRAM and HBM3 markets (Shilov, 2026; Semianalysis, 2026).
In order to protect their domestic memory chip ecosystems—which have been central to recent growth and are essential to national security—South Korea and the US (and Taiwan, where a substantial share of Micron memory chips are fabricated) may feel compelled to aggressively subsidize their own memory chip manufacturing to counter CXMT’s growing global market share. Ironically, the fact that CXMT’s pre-DRAM shortage prices only sat 5-10 percent below the DRAM prices offered by the US-Korean oligopoly may lead US and Korean policymakers to believe that CMXT’s price advantage can be substantially blunted or erased through their own subsidies. The chip industry’s scale, however, means that any subsidy package would be a substantial fiscal burden. Notably, CXMT receives state support for expansion and capital improvements primarily through state-controlled investment funds, a more fine-tuned instrument than simple cash transfer subsidies. South Korea and the US lack identical financing vehicles, making any response from Seoul and Washington more piecemeal. The only real alternative to supporting their own chipmakers—further semiconductor production equipment export controls designed to cripple CXMT’s ability to manufacturing high bandwidth memory—may lead China to retaliate by choking off critical minerals again (Potkin and Freifeld, 2026)
Moreover, even if Seoul and Washington overcame fiscal (and domestic political) constraints to dramatically expand chip subsidies or other forms of funding to help their firms fend off CXMT’s rising market share during a future slowdown in chip demand, Beijing might respond with additional subsidies of its own, leading to further market distortions and some of the same negative externalities that plague China’s domestic high-tech industries: namely, overcapacity and an underpriced product.
There is at least one notable recent parallel to this scenario. In 2022, the Biden administration’s Inflation Reduction Act (IRA) kicked off a subsidy-and-tariff race between the US, China, and the European Union across several green technology sectors. China had for years heavily subsidized the production of solar panels, wind turbines, and electric vehicles (EVs). President Biden’s IRA, coupled with high US tariffs on Chinese EVs and renewable energy equipment, was intended to rebuild a robust manufacturing supply chain in the United States. Though China’s central government has attempted to move away from direct subsidies for some of these sectors—particularly EVs —since around 2020, cut-throat price competition among city- and province-backed firms has continued to drive down prices (East Asia Forum, 2024). The European Union, seeing its longstanding dominance in green technology threatened by US and Chinese actions, launched its own industrial policy program, which has become a sore spot in EU-China and EU-US trade relations (Yu and Lu, 2026).
Central government backing for the memory chip industry under Beijing’s current self-reliance agenda is more steadfast, coordinated, and extravagant than it ever was for green tech in the 2010s and early 2020s. Given the national security imperatives involved for China, the US, and South Korea, there is all the more reason to think that the Seoul and Washington would aid their memory chip giants in price fights with CXMT and YMTC. In an AI spending downturn, however, the emphasis on US AI export dominance and US-allies full-stack ecosystem buildout may be muddled by pressing domestic demands on US fiscal resources and the wider financial ecosystem. It is an open question whether US policymakers and their South Korean counterparts would have the wherewithal to sustain a price war with Chinese competitors in price-sensitive Global South markets.
Conclusion
Samsung, SK Hynix, and Micron, are also investing in new capacity and R&D on HBM4, the current HBM frontier. These firms are clearly aware that, in the long-run, CXMT will pose a substantial threat to their market power and profit margins, even if they stay slightly ahead of CXMT on the HBM technological frontier. However, it may be difficult for the incumbents to protect their market share in DRAM from CXMT and NAND from YMTC, especially in China’s domestic market and emerging markets in Southeast Asia (Berman, 2026). If the US and Korean governments feel forced to deploy subsidies of their own to counter CXMT’s price advantage and Beijing responds with more subsidies of its own, the result could be the emergence of domestic Chinese-style subsidized, cut-throat price competition to a sector of geostrategic importance to the US and its allies.
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