On June 29, according to Reuters, three people familiar with the matter said that on the eve of Changxin Storage’s highly anticipated listing, the company signed a long-term supply agreement with Tencent Holdings worth more than 20 billion yuan (about 2.94 billion U.S. dollars).
Changxin Storage
The agreement covers the supply of server DRAM memory chips for several years, people familiar with the matter said.Two of the people said the agreement would last up to three years, while a third said it could be up to five years.
DRAM chips are key components in servers that power cloud computing, database and artificial intelligence workloads. Modern data centers require DRAM to ensure applications run without bottlenecks. Therefore, securing long-term supply contracts has become a priority for companies amid the ongoing global memory shortage that has caused memory chip costs to soar.
Further details of the deal are unclear at this time, including whether it covers Changxin Memory’s high-bandwidth memory (HBM) products. HBM is an indispensable and key component of high-performance artificial intelligence chips.
Two other people familiar with the matter said Changxin Storage is also negotiating similar cooperation with other major Chinese Internet companies.According to its IPO prospectus, Changxin Storage’s main customers include Tencent, Alibaba Cloud, ByteDance, Lenovo and Xiaomi.
The deal, which has not been previously reported, comes at a critical time for Changxin Storage. In May this year, Changxin Storage received approval from the Shanghai Stock Exchange and will conduct an IPO on the Science and Technology Innovation Board, planning to raise 29.5 billion yuan, which will make it one of the largest listing projects in mainland China in recent years.
As of press time, Tencent and Changxin Storage have not commented on this.