Chinese memory chipmaker ChangXin Memory Technologies (CXMT) has signed a long-term supply agreement with Tencent Holdings, according to Reuters, which cited sources for its exclusive report.
The deal is worth roughly $3 billion and runs for three years, covering DRAM chips used in servers. DRAM is the short-term working memory that computers and data-center servers rely on to run software and process information.
Reuters reports that the agreement comes ahead of CXMT's planned initial public offering. Locking in a major customer like Tencent — one of China's largest technology companies — gives CXMT a marquee contract to point to as it prepares to sell shares to investors.
The deal may not be the last of its kind. According to Reuters' sources, CXMT is in talks with other major Chinese companies about additional supply arrangements.
The global memory market has long been dominated by a small group of overseas producers, and China has been pushing to build up domestic suppliers like CXMT to reduce its reliance on foreign chips. A multibillion-dollar commitment from Tencent signals that homegrown memory makers are gaining traction with the country's biggest technology buyers.
Why it matters: A $3 billion vote of confidence from Tencent strengthens CXMT's hand as it heads toward an IPO and underscores China's accelerating drive to supply its own server memory rather than depend on established global chipmakers.