China's CXMT gains pricing power over Huawei, report says

Chinese memory chipmaker ChangXin Memory Technologies (CXMT) has spent months raising prices on Huawei, one of the country's biggest tech firms, and refusing to back down when Huawei pushed for relief, according to two people familiar with the matter, Reuters reported.

Tensions came to a head in June, when CXMT ordered engineers from Huawei-linked equipment vendor SiCarrier to leave its core research zone in Hefei, Anhui province, without warning, according to two sources.

The engineers had been carrying out maintenance work but have not been allowed back since. CXMT, Huawei and SiCarrier did not respond to requests for comment.

CXMT has grown to be the world’s fourth-biggest memory chip producer and entered into a $7 billion-plus contract for five years with ByteDance this month, sources said, after signing another contract worth more than $3 billion with Tencent in June.

In certain instances, CXMT and its flash memory rival YMTC sell their products at a higher price than Samsung and SK Hynix, the South Korean companies, four sources told Reuters.

However, both companies are rushing to get listed in Shanghai despite increasing scrutiny from Washington. Both have been labelled as Chinese military companies by the Pentagon, a label they reject, and YMTC is already on the US Entity List.

CXMT plans to go public with an initial offering worth $8.6 billion on the Shanghai STAR Market on Monday, having reported quarterly sales of $7.5 billion, a rise of 719% from last year.

The Cupertino giant has been lobbying for CXMT not to be added to the Entity List, while Micron has been pushing for tighter controls on the company, sources say.