Build1 publisher2 min readPublished
The flash shortage has pulled China's DRAM leader into a second market
China's dominant DRAM maker is preparing to make NAND too, in the memory segment that got the least new capacity spending, and analysts do not expect the shortage there to ease until the second half of 2027.
The Engineer · Build desk
What happened
- Chinese memory maker CXMT is preparing to enter the NAND flash market now largely held by Samsung and other international suppliers, according to Reuters, and wants a wider customer base as memory stays short.
- Two people told Reuters the plan centres on a research production line for NAND at a new plant in Beijing, alongside a Beijing research institute whose programmes include NAND development.
- CXMT has discussed the plans with potential customers, including a recently created startup, whose name was not disclosed, that intends to buy its chips for AI and supercomputer storage systems.
- Samsung was the largest NAND supplier by revenue in the second quarter with 29.3% of the market, ahead of SK Hynix in second place and Micron Technology in third.
- SK Hynix chief executive Kwak Noh-Jung said in July that on the supply side 2027 could be the hardest year the industry faces.
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Why it matters
- constraint Anyone pricing flash through 2027 has to do it on incumbent capacity, because a research line becomes a second source only once it has a date on it.
- cost Chinese buyers lose the assumption that the domestic part is the cheap part, since scarcity let CXMT and YMTC charge some of them more than foreign suppliers did.
- decision A customer qualifying parts off a pre-production line accepts the risk that trial output never becomes commercial volume, and the unnamed AI storage startup is the first to take it.
- precedent Beijing ends up funding both sides of a domestic memory fight, with CXMT going after NAND while YMTC has already sampled low-power DRAM to customers.
NAND got the least new money. Manufacturers pointed a large share of capital spending at DRAM and high-bandwidth memory, and flash capacity expanded more slowly [7]. DRAM is what a processor works out of; NAND holds the data in phones, computers and data centres [8].
Two people described CXMT's plan to Reuters and would not be named, because the company's plans are not public [9][10]. They did not say when the line starts running, or whether CXMT will carry it from research and trial output through to mass commercial production [10].
That gap matters to a 2027 budget. Analysts expect the NAND shortage to begin easing only in the second half of 2027 [6], and industry figures expect the broader memory shortage to run at least that long [4]. A research line ships no bits inside that window until CXMT dates it and commits to volume [21].
CXMT and YMTC are called the two stars of China's memory chip industry, and until now they mostly worked in separate segments [13]. The pricing detail in the Reuters account is the part I would take into a supplier review. Both companies sit behind the international leaders and sell mostly cheaper parts, but limited supply strengthened their hand with some Chinese customers, and in some cases the two priced above foreign competitors [15].
CXMT has the money. It raised 57.92bn yuan in July in the largest IPO in Asia this year, plans a second chip plant in Beijing, and has held financing talks with a technology manufacturing centre backed by local government [17]. CCSH, YMTC's parent, is preparing a Shanghai listing targeting 33bn yuan, about 57 percent of CXMT's July raise [18][20]. The national semiconductor fund and local governments stand behind both, with Hefei supporting CXMT's expansion and YMTC founded in Wuhan [16].
Both companies are part of Beijing's plan for a self-sufficient chip industry and for narrowing China's gap in strategic technologies, AI included [23]. Washington's rules pushed the same way: YMTC was added to a US restricted list in 2022, and the US later tightened China's access to the HBM used alongside processors in AI systems [19].
What to watch
- A published start date for the Beijing research line, or a stated commitment to mass commercial production, would decide whether CXMT counts as 2027 flash supply at all.
- CCSH's Shanghai listing: whether it raises the 33bn yuan it targets, and how much of that goes into added NAND capacity.
- Whether analysts move the second-half-2027 easing date as AI server orders update.