Computing demand continues to surge, yet electronic components remain in short supply. Prices for key memory chips called DRAM have jumped over 50% in just one quarter this year and have nearly quadrupled since last fall. With DRAM supplies running low, companies like Apple, Dell, and HP are considering purchasing memory from ChangXin Memory Technologies (CXMT), which the Pentagon has labeled a Chinese military company. Apple is reportedly seeking U.S. government guarantees that CXMT won’t face future sanctions, even as it claims it would only use these chips in products sold within China.
Even if all CXMT-made chips stayed within China, doing business with the company poses serious national security risks. Helping a state-backed firm gain global credibility undermines strategic competition in a market where financial strength drives influence. China has used this tactic successfully before—building domestic champions through targeted investment and subsidies with the goal of dominating critical sectors worldwide.
Lawmakers have taken notice. In a bipartisan letter dated July 14, they urged the Commerce Department to add CXMT to its Entity List—an export control measure requiring special licenses for certain transactions involving listed entities. Rather than shielding firms from consequences, the U.S. should firmly reject requests for reassurance and formally designate CXMT under this framework.
I am a data center regulatory attorney at Microsoft. These views are mine alone and do not reflect my employer’s stance. While Microsoft benefits from access to affordable memory, my argument focuses on safeguarding national interests, not commercial advantage. In fact, limiting ties with CXMT serves long-term Western stability despite short-term cost pressures.
Setting a Dangerous Precedent
Supporters argue that procuring CXMT components makes sense if security concerns focus narrowly on technical vulnerabilities or data exposure. Apple, Dell, and HP require reliable suppliers amid tight inventory conditions, and CXMT presents an alternative source. Apple also says any usage would occur exclusively in Chinese markets, seemingly reducing direct threats to Western consumers.
But this logic misses the broader point. Hardware doesn’t need hidden backdoors to become a geopolitical tool—it gains power through integration into global systems. The real question isn’t whether the chips contain flaws but whether validating them helps elevate a state-supported player into a dominant position within a capital-heavy industry.
Buying CXMT memory signals regression from lessons already learned by major tech firms wary of overreliance on China. Apple itself acknowledged risks tied to heavy dependence on Chinese operations and began diversifying production across India and Vietnam. Yet turning to CXMT reintroduces new dependencies in core computing infrastructure—undermining de-risking strategies currently in motion.
The pattern repeats itself throughout Apple’s history in Asia. As detailed in *Apple in China* by Patrick McGee, Apple invested approximately $55 billion annually into its Chinese supply chain by 2015, training millions of workers along the way. This concentration gave Beijing unprecedented leverage—from moving iCloud data to state-controlled servers in 2018 to enforcing app store restrictions during moments of domestic unrest.
Adopting CXMT memory risks repeating this cycle at deeper levels of the technology stack—shifting influence further into Beijing’s orbit via memory architecture rather than just assembly lines.
Capital as Strategic Weapon
In high-volume memory production, scale determines survival. Suppliers must weather periods of declining demand to stay solvent. In 1995, ten firms controlled roughly 80% of the DRAM market. Over time, giants like IBM, Hitachi, LG, Mitsubishi, NEC, and Texas Instruments exited entirely—even surviving government bailouts couldn’t save entities like Germany’s Qimonda or Japan’s Elpida.
DRAM pricing swings often force out weaker players unable to sustain losses until recovery arrives. Eventually, only Samsung, SK Hynix, and Micron remained viable. Their dominance reflects both efficiency and resilience built atop decades of volatile cycles.
State-backed competitors disrupt this balance by operating beyond normal profit expectations. Starting in 2014, Beijing launched a national integrated circuit initiative backed by public funding aimed at cultivating homegrown semiconductor prowess. Attempts included attempted acquisitions like the failed $23 billion bid for Micron and establishment of multiple memory ventures—including flash-focused projects and two DRAM-specific efforts: Fujian Jinhua and CXMT (then known as Innotron). Lacking private backing, CXMT turned to provincial governments for capital support.
Sustained subsidies allow CXMT to absorb downturns that previously bankrupted market participants—a luxury unavailable to purely commercial actors navigating cyclical downturns alone.
Risks of Legitimizing CXMT
Testing phases serve mainly to validate reliability—but meeting standards set by global brands confirms CXMT’s maturity underwritten largely by taxpayer-backed investments. Though Apple seeks lower costs and secure inventory, accepting inferior quality isn’t viable regardless of origin. By passing rigorous audits, CXMT demonstrates that Beijing’s strategic subsidies achieved their intended outcome: nurturing a capable rival ready for international expansion.
Currently ranked fourth among global DRAM producers, CXMT holds roughly 7.7% share worldwide. Endorsement from marquee clients elevates perception dramatically—as noted recently by analysts observing how Apple’s mere exploration signals “a strong validation of CXMT’s product reliability,” transforming it from a regional substitute into a credible global contender.
Limiting engagement restricts exposure—but deeper collaboration opens pathways toward climbing the value chain. According to CXMT’s own documents, future goals include developing advanced high-bandwidth memory essential for artificial intelligence applications.
Beyond technological advancement lies economic leverage. Partnerships grant access to margins traditionally enjoyed by top-tier vendors. Meanwhile, subsidized rivals erode pricing advantages held by Samsung, SK Hynix, and Micron—weakening incentives for continued innovation while transferring wealth indirectly to state coffers.
In early 2026, CXMT reported astronomical profits—33 billion yuan ($4.6 billion USD) on revenue growing over 700%. However, boom times mask underlying fragility masked by state intervention. During leaner years—like 2024 when losses reached $1.2 billion—market discipline typically eliminates unsustainable operators.
Next contraction cycles will test this disparity again. Only Micron operates headquartered within the United States, yet despite committing roughly $200 billion towards domestic expansion—including defense-grade materials—it remains exposed to standard fiscal constraints absent equivalent subsidies.
With memory foundational to countless technologies—including AI infrastructure bottlenecked by high-bandwidth variants—dependence on CXMT grants China systemic sway over digital capabilities globally.
While some suggest federal rescue packages might cushion blows to U.S. manufacturers facing subsidized foreign rivals, such interventions carry hidden costs. Rescuing private enterprises distorts free-market principles, encouraging risky behavior insulated by taxpayer funds.
Action Steps: Restricting Access Through Export Controls
Solicitations asking regulators to exempt CXMT ignore historical precedent proving such designations aren’t meant to bankrupt targets but restrict access to enabling technologies and markets.
Since listing firms limits transfers governed by U.S. jurisdiction—including manufacturing equipment and proprietary processes—the impact can still prove decisive. Consider 2018 when Fujian Jinhua faced similar controls; operations halted within five months following designation due to inability to acquire necessary semiconductors.
Similar logic applied in late 2020 upon adding Semiconductor Manufacturing International Corporation (SMIC) to the list. Despite continued operations, SMIC lost ground commercially without Western partnerships—demonstrating how strategic isolation curtails growth trajectories.
In 2022, Apple paused plans sourcing NAND flash from Yangtze Memory Technologies after Washington blacklisted the firm. Though Yangtze survives today using localized inputs, exclusion from broader ecosystems slows development significantly.
Criticism labeling such moves provocative overlooks evolving realities. Previously excluded from draft lists citing diplomatic sensitivity, CXMT cleared interagency reviews indicating readiness for formal action. Avoiding escalation may seem prudent—but delays empower adversaries incrementally strengthening footholds inside sensitive industries.
China’s 2023 ban restricting critical infrastructure purchases of Micron products underscored tit-for-tat responses driven by mutual self-interest rather than restraint.
Rising memory prices strain budgets across sectors—but relying on CXMT offers no immediate relief since internal allocations already max out current output capacity destined solely for domestic consumption.
Samsung, SK Hynix, and Micron command over 90% of today’s DRAM landscape, well-positioned to meet demand pending lengthy lead times required constructing new facilities.
Embracing CXMT prematurely grants premature legitimacy ahead of proven track record—inviting long-term dependence masked by temporary savings. Instead, collaborative initiatives among allies should prioritize accelerating indigenous capacity via streamlined incentives and policy reforms—not compromising sovereignty through entanglement with state-sponsored monopolies.
Designation empowers policymakers to deny China comparable leverage before dependency crystallizes globally. Therefore, placing CXMT squarely atop the Entity List represents timely intervention averting irreversible consequences.
Author Bio:
Faisal Akhter is a data center regulatory attorney at Microsoft and serves as a Judge Advocate in the U.S. Army Reserve. Views herein reflect personal opinion solely and do not represent positions held by his civilian employer, the Department of Defense, or federal agencies.
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Faisal Akhter is a data center regulatory attorney at Microsoft and serves as a Judge Advocate in the U.S. Army Reserve. Views herein reflect personal opinion solely and do not represent positions held by his civilian employer, the Department of Defense, or federal agencies.