[China’s AI Bottleneck] “Congressional Sanctions Compound Price and Technology Constraints” CXMT’s Apple Memory Ambitions Hit Roadblocks, Forcing Turn Toward China’s Domestic Market

Apple’s Review of CXMT Memory Draws Pressure From US Congress
Chinese Memory Prices Soar as Performance, Product Maturity and Yields Remain in Question
CXMT’s Rapid Capacity Expansion Tests the Depth of Mainland Demand

Apple’s plan to procure Chinese-made memory chips has encountered practical constraints. US lawmakers are seeking to block transactions with Chinese memory manufacturers, while products from ChangXin Memory Technologies (CXMT), a prospective supplier, have also failed to deliver the expected price competitiveness. Given the broader risks surrounding Chinese memory products, including performance and product maturity shortfalls as well as uncertain yields, CXMT is unlikely to displace Apple’s established supply chain in the near term.

US Congress Moves to Block Apple’s Purchase of Chinese Memory

Technology publication 9to5Mac reported on Aug. 11 local time that Apple’s chip procurement plans were facing disruption as US lawmakers pushed for sanctions against Chinese memory companies. The Wall Street Journal (WSJ) had reported on Aug. 9, citing multiple people familiar with the matter, that Apple was testing CXMT memory across several product lines, including the iPhone and MacBook. Apple also reportedly held preliminary discussions over the use of CXMT components in certain devices sold in China. The move is widely viewed as a strategy to address the prolonged memory supply shortage. Apple currently sources customized memory from the industry’s three global leaders: South Korea’s Samsung Electronics and SK hynix, and US-based Micron Technology.

US lawmakers have long sought to obstruct Apple’s plans. John Moolenaar, the Republican chairman of the House Select Committee on China, previously warned that “Apple partnering with a Chinese military company would be a serious mistake” and could “help the Chinese Communist Party gain control over critical supply chains.” Last month, Moolenaar and Democratic Representative George Whitesides also sent a letter to US Commerce Secretary Howard Lutnick expressing concern about CXMT and Yangtze Memory Technologies Co. (YMTC) entering the US market and calling for CXMT to be added to the Commerce Department’s Bureau of Industry and Security (BIS) Entity List. The Entity List functions as a US government export-control blacklist. BIS places companies and institutions on the list when it determines that they have engaged in activities contrary to US national security or foreign-policy interests, or pose a significant risk of doing so. Listed entities must generally obtain BIS authorization to export or re-export products, software and technology subject to the US Export Administration Regulations (EAR), while most license exceptions are also restricted.

CXMT Memory Prices Soar

Even if Apple were to overcome congressional opposition and proceed with a CXMT deal, the resulting cost savings would likely remain limited. Market expectations have centered on the prospect that adding a Chinese memory producer to Apple’s supply chain could diversify procurement away from the three incumbent suppliers and strengthen its bargaining power over prices. Chinese manufacturers have historically focused on price competitiveness to narrow their technological deficit and expand market share. Under current memory market conditions, however, CXMT can scarcely be classified as a low-cost supplier. Reuters reported last month that CXMT was selling 64-gigabyte (GB) DDR5 server modules at prices exceeding those of comparable Samsung Electronics products and had also quoted Apple a higher price than Samsung.

The AI-driven memory shortage lies behind the sharp increase in CXMT’s prices. The three leading memory manufacturers have recently concentrated production capacity on high-value products such as server DRAM and high-bandwidth memory (HBM) to meet surging investment demand from AI data centers and servers. The shift has tightened supply across conventional DRAM as well as high-performance memory. CXMT, a late entrant focused on commodity DRAM, consequently has less incentive to win customers through low prices and can instead demand prices comparable to or higher than those charged by established suppliers.

Performance and Product Maturity Remain Weak

The performance gap also remains pronounced. TechInsights’ analysis of CXMT’s 16-gigabit (Gb) DDR5 found that the product was manufactured using a 16-nanometer-class process. That trails considerably behind the 12- to 14-nanometer processes used by the three leading memory producers for DDR5 manufacturing. TechInsights assessed CXMT’s DDR5 technology, commercialized in late 2024, as broadly comparable to the generation that industry leaders began mass-producing in 2021, placing the technological gap at roughly three years. Entry barriers are even higher at the most advanced process nodes. US restrictions prevent CXMT from importing advanced extreme ultraviolet (EUV) lithography systems produced almost exclusively by the Netherlands’ ASML. The company is therefore pursuing process miniaturization through multipatterning, which uses conventional deep ultraviolet (DUV) equipment to expose the same circuitry multiple times. The approach carries substantial disadvantages in both yield and cost.

The disparity in product maturity is similarly evident. Tom’s Hardware reported last month, citing tests conducted by overclocker SafeDisk, that a 48GB memory kit equipped with CXMT’s 24Gb DDR5 dies operated at speeds of up to approximately 8,600 megatransfers per second (MT/s), compared with its standard DDR5-6000 specification. Achieving that speed, however, required loosening the timings that determine memory data-response speed from CL36 to CL44. The higher operating frequency therefore came at the expense of latency, a major determinant of real-world performance. CXMT’s DDR5 also exhibited limited voltage scaling, with higher voltage producing only marginal gains in clock speed or timing. DRAM performance can generally be pushed beyond default specifications by adjusting voltage and timings, yet CXMT’s products appear to offer relatively little additional headroom. Wide variations in silicon characteristics and overclocking limits across production batches were also identified as a concern.

Table 1. Limitations of CXMT Memory

Uncertainty Over DDR5 Process Yields

Doubts over production yields also remain unresolved. Chinese media outlets have recently reported that CXMT’s 17-nanometer DDR5 yield has exceeded 90%. With the yield for Samsung Electronics’ comparable-generation products reportedly standing at 92% to 93%, the reports claim that the gap between the two companies has narrowed to roughly 2 percentage points. Yield refers to the proportion of functional chips produced from processed wafers. Higher yields increase the number of usable products obtained from the same production capacity, strengthening cost competitiveness and supply stability.

Industry officials question whether CXMT has genuinely achieved yields approaching 90%. The multipatterning process used by CXMT requires the same circuit pattern to be formed across multiple stages, causing yield losses to accumulate at every step. Even when the success rate of each individual patterning stage is high, repeating the process several times can sharply reduce the final yield. Achieving a final yield of 90% would require stability far above 90% across virtually every sub-process, a level considered difficult to attain in practice.

CXMT’s profit margin has further intensified doubts over its actual yield. “Memory prices have risen sharply amid the AI boom, while some procurement costs in China are lower than those faced by South Korean manufacturers,” one industry official said. “If CXMT had secured a yield approaching 90%, its profit margin should be substantially higher than the currently reported range of around 50%.” The official added, “Reverse-engineering the cost structure from its actual profit margin suggests that the 80% to 90% yields cited in the market may be significantly overstated.”

CXMT’s Growth Potential

Some analysts caution against dismissing CXMT merely as a late entrant. Their assessment focuses on the pace of the company’s production-capacity growth rather than its immediate technological constraints. Industry estimates indicate that CXMT’s monthly DRAM wafer-input capacity will increase from 265,000 wafers at the end of last year to 350,000 by the end of this year, before reaching between 500,000 and 600,000 wafers by 2028. Long-term funding from the Chinese government underpins the aggressive expansion. CXMT was founded in 2016 with investment from a company affiliated with the Hefei Economic and Technological Development Area in Anhui Province. Reuters’ analysis of CXMT’s listing documents found that state-owned capital from Anhui and Hefei currently controls approximately half of the company’s shares, while China’s state-backed semiconductor investment vehicle, known as the Big Fund, is also a major investor.

Demand in China’s domestic market is also likely to emerge as a critical variable. China currently accounts for approximately 25% of global DRAM demand, while its self-sufficiency rate remains at around 30%. A substantial share of the output generated through CXMT’s aggressive expansion could therefore be absorbed by the domestic market. This would allow the company to rapidly increase market share without resorting to an aggressive low-price campaign globally. If CXMT reinvests profits generated by domestic demand into further capacity expansion and process improvements, its position in the global market is expected to strengthen progressively.