China’s two largest memory manufacturers, CXMT and YMTC, are said to each be embarking on an unprecedented expansion spree as, amid a global memory shortage, they see a golden opportunity to close the gap with the big-three incumbents Samsung, SK hynix, and Micron.
The two Chinese memory giants want to significantly expand their respective DRAM and NAND production over the next two years, according to reporting by Nikkei Asia, as AI infrastructure continues to squeeze the memory sector dry. The expansions, which are understood to center on new fabs in Shanghai and Wuhan, come as the big three continue to prioritize HBM output for AI accelerators over conventional DRAM.
New fabs targeted for 2027
CXMT is preparing a major DRAM facility in Shanghai that’s expected to be two-to-three times larger than its existing Hefei headquarters, with equipment and installation beginning later this year and volume production targeted for 2027. YMTC, traditionally a NAND flash supplier, is constructing a third fab in Wuhan that will also come online around 2027. Roughly half of that facility’s planned output is expected to be dedicated to DRAM rather than NAND — a significant deviation from the norm for YMTC.
“The company’s plants in Hefei and Beijing are already running at full capacity,” a source told Nikkei Asia, adding that CXMT sees very high demand from local companies to expand capacity as soon as possible. Samsung and SK hynix have both warned customers that memory supply tightness is likely to persist into 2027 as they continue allocating capacity to AI.
YMTC pivots to HBM
Commodity DDR5 for PCs and servers is constrained primarily because suppliers have redirected investment and wafer starts toward HBM, which carries substantially higher margins and is essential for AI accelerators. SK hynix currently dominates this space, supplying around 60% of global output, with Samsung and Micron splitting most of the remainder. All three vendors are expanding HBM capacity, but doing so comes at the expense of conventional DRAM, which has rocketed in price, creating a massive demand-side gap among consumers calling for more supply.
CXMT and YMTC clearly want to fill this gap. While the former remains a few generations behind the leading edge, it has demonstrated working DDR5 designs — mass production is still delayed — and has reportedly delivered HBM samples to domestic AI customers, including Huawei. Chinese sources cited by Nikkei suggest that CXMT intends to add dedicated HBM3 production lines as part of its Shanghai fab, with initial volumes aimed at domestic AI accelerators.
Meanwhile, YMTC is leveraging its packaging expertise to move into HBM. Rather than competing head-to-head with CXMT on DRAM process technology, YMTC is expected to focus on advanced assembly and HBM integration, working with local partners to produce memory stacks suitable for AI workloads. 50% of the company’s new plant’s capacity will produce DRAM, according to Nikkei. “They [YMTC] started to develop their own DRAM more than two years ago… now it’s only a matter of time for them to produce quality DRAM and HBM going forward,” said one of YMTC’s suppliers
A rock and a hard place
If successful, these expansion efforts will give China a vertically integrated domestic HBM supply chain, spanning DRAM wafer fabrication, stacking, and final assembly, without relying on outsiders.
That is exactly the outcome that the U.S. and its allies have attempted to slow down through export controls that restrict Chinese access to advanced manufacturing equipment. Currently, rules limit tool sales for sub-18nm DRAM processes and 128-layer or more 3D NAND, and explicitly target advanced packaging technologies relevant to HBM.
Despite these restrictions, Chinese memory makers have continued to make incremental progress by relying on older-generation tools and domestic equipment vendors. CXMT’s recent and unexpected demonstrations of high-speed DDR5 and LPDDR5X parts seriously highlight just how much headroom for progress still exists even in the absence of advanced tooling like EUV.
While it’s likely that Chinese HBM will trail the latest HBM3E and HBM4 designs from the likes of Samsung and SK, both in terms of bandwidth and density, it may be more than sufficient for domestic AI deployments. This creates an uncomfortable tradeoff for Western legislators and policymakers because any further tightening of export controls will just accelerate China’s push towards full self-sufficiency, while relaxing them would ease global shortages but undermine the intent of the restrictions.
Micron had already effectively lost access to the Chinese market following Beijing’s restrictions on its products in 2023, leaving Samsung and SK hynix as the primary foreign suppliers. Both Samsung and SK hynix operate large fabs in China that are now frozen in time due to U.S. rules, and both are investing heavily in next-gen memory outside China to stay ahead in HBM. As Chinese DRAM output rises, it’s entirely conceivable that both might look to exit the Chinese market entirely due to lack of viability, particularly if domestic progress emboldens Beijing to impose even tighter restrictions.
Expansion efforts by Chinese firms do not currently threaten the big three in high-end HBM, but they make waves in the DRAM market. Additional Chinese capacity aimed at domestic consumption reduces China’s dependence on imports and weakens the pricing power of global suppliers over time. In a market that’s already prone to relentless boom-bust cycles, any additional capacity could amplify volatility once, or if, AI demand stabilizes.
Luke James is a freelance writer and journalist. Although his background is in legal, he has a personal interest in all things tech, especially hardware and microelectronics, and anything regulatory.
