BEIJING: Chinese memory chipmaker ChangXin Memory Technologies (CXMT) has signed a long-term server memory chip supply agreement with Tencent Holdings worth more than CNY 20 billion (USD 2.94 billion), according to three people familiar with the matter.

The agreement covers DRAM chip supplies for servers over three to five years, although neither company commented on the deal. The agreement comes ahead of CXMT’s planned CNY 29.5 billion initial public offering (IPO) on Shanghai’s STAR Market, which is the Science and Technology Innovation Board of the Shanghai Stock Exchange approved in May.

The deal underscores rising demand for memory chips amid a global supply shortage and constitutes a major endorsement for CXMT, China’s largest DRAM maker. The company reported first-quarter revenue of CNY 50.8 billion, up 700 percent year on year, and is expanding production capacity while also pursuing similar agreements with other major Chinese technology companies.