China is poised to gain as global memory makers pivot to AI chips Linda_Heyer Wed, 06/03/2026 - 10:13 picture alliance / Zoonar | Askolds Berowskis Comment Jun 03, 2026 3 min read China is poised to gain as global memory makers pivot to AI chips China is capitalizing on the US and South Korean memory makers’ shift into high-margin AI chip production by building up its mass production of cheap memory chips – a trend that may create a new European dependency on China. Major Chinese memory chip makers are already benefitting from skyrocketing prices as demand grows. They are now focusing on mass production of mature Dynamic Random Access Memory (DRAM) chips and NAND flash memory, vital for core industrial sectors such as automotive electronics, industrial automation, and medical equipment. Europe’s highly price-sensitive automotive and industrial sectors do not rely on advanced AI chips, but they do need large amounts of memory chips, for which Europe has no domestic production. And there is no new capacity on the horizon, as the European Chips Act focuses on logic and power chips rather than memory. Even if Europe leads in automotive power chips, those cars do not work without memory. Many other industries have given up low-margin, high-volume parts of their manufacturing to China in past years. While this may boost profits in the short term, it has led to supply chain dependencies in the long run. Moreover, if history is any indication, Chinese industrial players can then use the experience they gained, the ecosystem they have built and China’s generous industrial policy to climb value chains and replace Western companies altogether.
Without policy intervention, the trend is clear: China’s two top players, Yangtze Memory Technologies (YMTC), which makes NAND chips, and ChangXin Memory Technologies (CXMT), which focuses on DRAM, will gain market share in Europe due to low prices and available stock. YMTC also announced two more fabs in April on top of one under construction, and expects to more than double capacity by 2027. CXMT is now the world’s fourth-largest DRAM maker, with 5 percent of the global market in 2025. While not at the cutting edge for AI workloads, these chips are good enough for most other applications. Even Apple is considering using them. European companies might be enticed to switch full lines over to Chinese memory makers, especially given their current economic woes, but they would be better off stockpiling and keeping Western chips in rotation and certified. The recent Nexperia saga showed how quickly supply can be disrupted. Likewise, US and Korean chipmakers should be wary of switching all production over to AI chips and displacing traditional, diversified customers with customers in only one sector. Antonia Hmaidi , Head of Program Science, Technology and Innovation Policy, MERICS: “China will capitalize on the AI-driven memory shortage and push into the global memory market. Europe should avoid new dependencies on Chinese memory chipmakers. Policymakers across the bloc should increase long-term support for the reliable supply of legacy chips, including in memory, by updating the Chips Act, using other available instruments and incentivizing companies to not introduce new dependencies.” Author(s) Antonia Hmaidi Head of Program (Co-lead) Author(s) Antonia Hmaidi Head of Program (Co-lead) Related content about Industrial Policy and Technology China’s swift moves on brain-computer interfaces challenge Europe and the US Comment Jun 03, 2026 XPeng (小鹏汽车) pushes to increase European manufacturing presence Comment Jun 03, 2026 China’s AI competition strategy: Wide dispersion, cheap tokens Comment Jun 03, 2026