China's DRAM Giant CXMT Plans Second Factory in Beijing

China's major memory manufacturer CXMT is considering constructing a second wafer fabrication plant in Beijing, aiming to expand production capacity in response to rising global chip demand fueled by artificial intelligence (AI) infrastructure investments.

On Monday (3rd), Reuters cited two informed sources reporting that the new facility is expected to be located in Beijing's Yizhuang area, approximately 20 kilometers southeast of the city center, and will be a 12-inch wafer factory dedicated to producing dynamic random-access memory (DRAM). CXMT currently operates one DRAM factory in the region.

CXMT is seeking at least RMB 60 million (approximately USD 8.9 million) in support from the Beijing Economic-Technological Development Area management authority, with other state-backed technology firms also expressing interest in participating in financing. However, these discussions remain in preliminary stages, and the final funding scale and structure may still change.

It remains unclear whether funds will be provided directly by the development zone authority or through its affiliated investment vehicles. The planned production capacity and total investment for the new plant have not yet been determined, though construction costs for advanced DRAM-capable fabs typically exceed USD 10 billion.

Neither CXMT nor the Beijing municipal government responded to requests for comment.

Expansion in Shanghai and Hefei could push monthly output beyond 600,000 wafers

Reuters previously reported that CXMT is building new factories in Shanghai and Hefei and discussing additional production sites with other local governments. Once all projects are fully operational, the company's monthly production capacity could more than double, exceeding 600,000 wafers.

Insiders revealed that CXMT currently operates two 12-inch DRAM fabs in Hefei and another of the same type in Beijing, each with a monthly capacity of about 100,000 wafers. If the second Beijing plant is completed, it will further expand CXMT's production capacity and influence in China's DRAM market.

These financing talks began before CXMT's public listing. The company completed an IPO worth USD 8.6 billion last month, setting a record as the largest semiconductor listing by a Chinese firm within China, with proceeds allocated toward a new round of capacity expansion. Since going public, CXMT's stock price has risen 13%.

Rising demand from AI infrastructure, data centers, and consumer electronics has driven the memory industry into an upcycle, prompting CXMT to accelerate its capacity expansion. The company has become a key pillar in Beijing's push for chip self-reliance, tasked with narrowing the technological gap between China and the United States in strategic areas such as AI.

According to Counterpoint Research, CXMT is currently the world's fourth-largest DRAM manufacturer, although its overall scale remains far smaller than that of Samsung Electronics, SK Hynix (SKHY-US), and Micron Technology (MU-US). These three giants collectively held nearly 90% of the global DRAM market in the first quarter.

However, CXMT's dominance in the Chinese market continues to grow. Reuters previously reported that the company has raised memory prices for clients such as Huawei, leveraging its expanding market share.

Local governments compete to attract investment, replicating the 'Hefei Model'

CXMT's rise is closely tied to the so-called 'Hefei Model.' Hefei, the capital of Anhui Province, has long supported strategically important tech companies with government funding, with CXMT being a prime example.

As CXMT accelerates its expansion, both Beijing and Shanghai have begun offering financial and policy support, hoping to capture the economic benefits and strategic value brought by its growth. Competition among local governments to attract CXMT's investment reflects intensifying rivalry across China to secure positions in the semiconductor supply chain.

CXMT's existing Beijing fab is operated by ChangXin Jidian, established in 2020. Corporate records show that the company received funding from Yizhuang Guotou, a state-owned investment institution under the Yizhuang Development Zone, and its affiliate Beijing Yizhuang Technology.

The Beijing Economic-Technological Development Zone hosts several tech firms, including foundry SMIC (00981-HK), semiconductor equipment maker NAURA, and smartphone and EV manufacturer Xiaomi (01810-HK). The zone is also actively developing robotics and AI industries, aiming to establish Yizhuang as a key hub for advanced manufacturing and physical AI in China.