Given the relentless demand for computing power, electronic components are in scarce supply. Prices for certain memory chips, known as DRAM, have surged by more than 50 percent in a single quarter this year, and have roughly quadrupled since last fall. Because DRAM supply is tight, Apple, Dell, and HP are currently evaluating memory from ChangXin Memory Technologies (CXMT), a company the Pentagon has designated as a Chinese military company. Apple, in particular, has sought assurances from the U.S. government that CXMT will not face future sanctions that would cut off its supply. Apple justifies its request by pledging to use CXMT chips for its products sold in China.
Even if every chip stays in China, the arrangement endangers national security. Such use and validation would build a state-backed champion into a global competitor in a market where capital is the attack vector. The Chinese government has successfully employed this strategy before. Recognizing this playbook, lawmakers published a bipartisan July 14 congressional letter demanding the Commerce Department add CXMT to its Entity List, an export-control designation that imposes licensing requirements on specified transactions involving listed entities. Given this history, the United States should not only refuse any assurances by these companies, but also place CXMT on the Entity List.
I am a data center regulatory attorney at Microsoft. The views expressed here are solely my own and do not reflect my employer’s position. Microsoft benefits from a larger and cheaper supply of memory, which my call to expand allied production would advance. However, in the near term, the position I take here would keep a low-cost supplier out of the Western supply chain. I argue for this position on national security grounds, rather than commercial ones.
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Apple Has Run This Experiment Before
The case for procuring CXMT components is strongest if national security concerns are limited to the memory and whether it contains exploitable vulnerabilities or could expose user data. Apple, Dell, and HP have a conventional technical need, and CXMT offers another potential supplier in a constrained market. Apple also proposes using the chips in devices sold in China. On that framing, the arrangement appears to reduce the direct risk to Western user data, meaning federal intervention looks more like economic protectionism than security policy. However, such framing is far too narrow. Hardware components need not be compromised to create geopolitical leverage. The relevant risk is whether this procurement and validation help a state-backed supplier become a global competitor in a capital-intensive commodity market.
Western purchase of CXMT memory is a step backwards from the industry’s recognition of exposure to the Chinese government. In particular, Apple recognizes the risks created by its heavy dependence on China and has since expanded manufacturing in India and Vietnam partly to reduce that concentration. Yet sourcing DRAM from CXMT would introduce new exposure to China in a strategically sensitive component. The pursuit of CXMT suggests that short-term supply pressures are overriding the longer-term de-risking strategy, while advancing Beijing’s objective of making itself indispensable to critical technology supply chains through multiple structures.
The precedent for such structural dependencies is well-documented within Apple’s own operational history. In the book Apple in China, Patrick McGee describes how Apple was investing $55 billion a year in its Chinese supply chain by 2015, and by its own count, has trained 28 million workers there. The resulting asymmetry allows Beijing to regularly exert regulatory leverage over Apple’s operations. In 2018, Apple migrated its mainland iCloud data and encryption keys to a Chinese state-owned operator. In 2022, Apple limited open AirDrop sharing in China to a ten-minute window, restricting a feature that protesters had used to distribute information outside state-controlled channels. In 2023, Chinese government agencies restricted iPhone use. In 2024, Apple complied the same day Chinese regulators ordered Western messaging applications off its domestic app store. Apple is now spending to diversify assembly to India and Vietnam, but that shift has proved difficult. Amid reported directives from Chinese officials to curb equipment and technology transfers to India, Foxconn recalled hundreds of Chinese engineers from its Indian facilities.
A purchase agreement with CXMT would begin the same process, except now at the memory layer. Apple’s dependence on Chinese assembly did not arise because alternative factories were technically impossible. It developed over time. Apple built scale, expertise, infrastructure, and supplier networks in China, making alternatives progressively less competitive. Despite spending heavily to diversify assembly beyond China to decouple its assembly line from Beijing’s leverage, Apple’s proposed adoption of CXMT memory would initiate the same dependence one layer deeper in the hardware stack, trading short-term margin optimization for long-term structural vulnerability.
Capital Is the Attack Vector
In high-volume memory manufacturing, scale enables continued market viability. Memory suppliers must be able to endure inevitable periods of low demand. In 1995, ten DRAM suppliers held roughly 80 percent of the market. Since then, Hitachi, IBM, LG Electronics, Mitsubishi Electric, NEC, and Texas Instruments have left the market. Even government interventions could not change market dynamics. Germany extended Qimonda multiple bailout packages, yet it eventually liquidated. Japan infused ¥30 billion of public money into Elpida, and less than three years later, its collapse was the largest manufacturing bankruptcy of postwar Japan. DRAM prices fell below cost, and the suppliers unable to absorb the downturn collapsed. Over time, the number of suppliers consolidated to Samsung, SK Hynix, and Micron, which now hold more than 90 percent of the market.
State-backed enterprises upend these market dynamics by operating outside normal commercial constraints. In 2014, the Chinese government created a national integrated circuit plan, committing state funds to build a domestic chip industry. The following year, a Chinese state-backed group unsuccessfully attempted to buy Micron for $23 billion. Undeterred, the Chinese government stood up three memory ventures: one in flash memory, and two in DRAM, Fujian Jinhua and CXMT, then known as Innotron Memory. Private investors would not fund CXMT, so Hefei, the capital of Anhui province, did. In the decade that followed, CXMT absorbed losses that had bankrupted companies before it. Sustaining such a level of market endurance strongly supports a national security strategic purpose.
What Major Western Manufacturers Would Help Build
While testing is strictly a validation of technical quality, that quality is the direct result of state intervention. Apple, Dell, and HP’s interest in CXMT is driven by cost and supply chain leverage, but a low price is irrelevant if the hardware is unreliable. For example, by meeting Apple’s exacting standards, CXMT has proven that Beijing’s subsidies achieved its national security goals of funding a domestic challenger sophisticated enough to compete in this difficult market.
CXMT is the fourth-largest DRAM producer in the world, accounting for roughly 7.7 percent of market share in 2025. Despite its success in volume, securing the endorsement of a company like Apple is a different type of validation. As a Citi analyst note observed, Apple’s mere consideration of CXMT is “a strong validation of CXMT’s product reliability.” The same note said it changes “market perception of CXMT from a domestic substitution play to a credible global No. 4 DRAM maker.”
Even if Western manufacturers commit to using CXMT chips solely for its Chinese-market products, that commitment does not extend to the rest of the world nor is it limited to commoditized memory chips. While CXMT produces commoditized DRAM today, such potential partnerships will give it the runway to climb the value chain. As its prospectus indicates, CXMT plans to produce the high-bandwidth memory that AI requires. Should CXMT become a partner, it will be a proven supplier to the world and accelerate its program.
In addition, such a partnership would provide the Chinese government a path to its competitors’ margins, eroding the profit gap between manufacturing costs and selling prices. Vendors now compete against the Chinese government, structurally diluting the pricing power of the established oligopoly of Samsung, SK Hynix, and Micron.
Today, CXMT is one of the most profitable memory companies in the world. In the first quarter of 2026, it reported a 33 billion yuan profit on revenue that grew more than 700 percent. However, it is the current AI boom that makes today’s memory producers profitable. CXMT is the same company that lost $1.2 billion in 2024, a year when memory prices were rising. Memory companies are truly tested by the downturns that consolidate the memory market. In the next contraction, state support may allow CXMT to tolerate losses longer than commercial rivals. On the other hand, Micron, the only U.S.-headquartered DRAM producer faces ordinary financial constraints even as it has committed approximately $200 billion to domestic production, including production for defense and aerospace applications.
In the next chip market downturn, CXMT will dictate the pricing floor, as its expansion is directly capitalized by China’s national integrated circuit plan. Insulated by sovereign wealth, the company can indefinitely sustain below-cost pricing, threatening to restart the aggressive consolidation cycles that historically destroyed the West’s secondary memory ecosystems. This dynamic is a direct continuation of the DRAM price wars that drove out Qimonda and Elpida. Each cyclical contraction will structurally transfer market share to a state-capitalized entity.
Given that memory is foundational to many modern systems, with high-bandwidth memory serving as the bottleneck for AI, systemic dependence on CXMT would grant Beijing structural leverage over global computational infrastructure.
Perhaps Washington would rescue Micron from this hypothetical fate, as it rescued Intel. But as history has shown, that is no survival guarantee. Furthermore, a future bailout reveals the true cost of partnership with CXMT. When a dominant consumer tech firm optimizes its margins by sourcing from a strategic, state-backed company, it forces traditional market-driven vendors to operate at a loss. To keep those vendors viable, the U.S. government should repeatedly bridge the financial shortfall.
Adding CXMT to the Entity List
Although Apple has asked the U.S. government for assurances that CXMT will remain off the Entity List, the United States should instead add it. Its designation would impose licensing requirements on the export, reexport, or in-country transfer of the items specified in its entry. That could restrict the U.S.-controlled tools and technology on which its fabs depend, but it would not, by itself, impose a blanket prohibition on Western manufacturers purchasing CXMT chips. The potential effect can nevertheless be substantial. In 2018, after Commerce added Fujian Jinhua, another Chinese DRAM venture, to the list, the company ceased production within five months.
Commerce added Semiconductor Manufacturing International Corporation to the Entity List in December 2020, roughly five months after its July Shanghai offering. The company’s continued operation, however, also shows why designation is not existential. The goal in placing companies on the Entity List is not to put the company out of business. Rather, it is to deny it the Western technology and demand that could turn it into a source of supply-chain leverage for Beijing. Its effect depends on the scope of the listing, the license-review policy, enforcement, and allied coordination. Similarly, in 2022, Apple sought to source NAND flash memory from Yangtze Memory Technologies but suspended those plans after the United States added the company to the Entity List. Despite its addition to the Entity List, Yangtze Memory Technologies continues to exist and expand through a more localized supply chain rather than major Western manufacturer partnerships.
This designation may be seen as a provocation to the Chinese government. Indeed, while the United States previously removed CXMT from a draft Entity List in 2024, CXMT has since cleared the interagency review for designation, yet remains off the published list. While concerns of retaliation are understandable, restraint does not prevent future escalations. In 2023, the Chinese government banned its critical infrastructure operators from purchasing Micron products, in a move widely perceived as retaliation for U.S. export controls. Beijing’s retaliatory actions are dictated by its own strategic leverage and industrial objectives, independent of Washington’s regulatory posture.
Surging memory prices have forced downstream price hikes for Apple and other tech manufacturers, spreading supply constraints across other industries. However, framing this as a trade-off between immediate economic relief and long-term strategic risk ignores the stark operational reality that CXMT cannot offer immediate relief. Its baseline fabrication output is already entirely allocated to domestic Chinese demand.
Today, Samsung, SK Hynix, and Micron supply more than 90 percent of the global DRAM market. They are well positioned to supply what the market demands. However, new capacity takes years to build. By partnering with CXMT today, Western manufacturers provide it with the runway needed to gain a foothold in the market. At the next market downturn, the Chinese government’s support of CXMT will allow it to invest aggressively while its rivals are forced to reduce spending in this capital-intensive market. It is this asymmetric, market-insulted dynamic that will eventually erode their otherwise dominant market share.
The incumbent producers are not blameless. Their record includes price-fixing in the 2000s, and their reluctance to overbuild contributed to supply lagging the AI boom. But they remain critical to solving the shortage. The United States should work with South Korea and other allies to accelerate new fabrication capacity using traditional levers, such as investment incentives, faster permitting, and long-term purchase commitments. The response to today’s shortage should expand allied supply rather than finance and qualify a state-backed competitor. By placing CXMT on the Entity List now, the United States can deny the Chinese government similar leverage before the world’s memory supply comes to depend on it.
Write for Cogs of War
Faisal Akhter is a data center regulatory attorney at Microsoft and a Judge Advocate in the U.S. Army Reserve. The views expressed in this article are those of the author alone and do not represent those of his civilian employer, the U.S. Army, the Department of Defense, or the U.S. government.
Image: Midjourney
