On June 29th, according to media reports, three insiders revealed that CXMT, a leading domestic storage chip company, has signed a long-term supply agreement worth over 20 billion yuan (approximately 2.94 billion US dollars) with Tencent Holdings. 

According to insiders, this cooperation belongs to a multi-year long-term supply agreement and will continue to provide DRAM chip supply for Tencent's server business. 

Regarding the specific duration of the agreement, two insiders stated that the maximum duration of the agreement is three years, while another insider stated that the cooperation period can reach up to five years. Currently, more details of this transaction are still unclear. 

In addition to the blockbuster cooperation with Tencent, two insiders said that CXMT was still negotiating with other major Chinese Internet companies on similar cooperation.

According to publicly available industry data, CXMT, with its three major 12 inch DRAM wafer fabs in Hefei and Beijing, has maintained its position as the industry leader in domestic DRAM production capacity and the fourth largest globally. Its current monthly production capacity has reached 200000 wafers, and the pace of capacity expansion continues to accelerate. 

According to international industry institutions' predictions, its DRAM monthly production capacity is expected to climb to over 350000 chips by the end of 2026, gradually approaching the level of international leader Micron. 

The continuous capacity ramp up and large-scale production capability are the core confidence for CXMT to undertake long-term supply agreements worth billions of yuan from Tencent. 

In the past, the global DRAM market has long been monopolized by three giants, American Micron Technology, South Korea Samsung, and SK Hynix. The DRAM chips of servers of domestic Internet enterprises are highly dependent on imports, and the supply chain is at risk of instability. 

This in-depth cooperation not only verifies the performance, quality, and supply stability of CXMT's DRAM products, effectively digests its new production capacity, accelerates the commercialization of production capacity, but also effectively fills the gap in domestic high-end server DRAM independent supply and continues to promote domestic substitution in the DRAM field.