Despite new smartphone launches from Apple, Huawei, Oppo, Vivo, and Xiaomi, memory prices are rising, which is weakening sales momentum and prompting Chinese smartphone brands to adjust their product mix. DIGITIMES Intelligence senior analyst Luke Lin expects smartphone shipments in China to fall more than 13.5% year-over-year in the fourth quarter of 2026, and total shipments by Chinese brands to decline more than 35% year-over-year. These shipment declines are analyst expectations, not realized results.
memoryApple, Huawei and 5 totalDigiTimes AsiaPrice Movement
Huawei has extended its semiconductor-focused "Tau (τ) Law" framework to 5G base station design, using co-design across algorithms, chip architectures, and high-speed interconnects to boost baseband processing efficiency and enhance the wireless user experience. The company unveiled its OSCAR intelligent channel-processing solution, its next-generation UBBPi baseband series, and the VitaAAU active antenna unit for the U6GHz band, with the VitaAAU already entering commercial deployment in select overseas markets.
basebandUBBPi baseband seriesVitaAAU active antenna unitHuaweiDigiTimes Asia
According to a 2026-10-28 report citing Reuters sources, CXMT's HBM3E yields currently stand at just 20% to 30%, well below the approximately 70% achieved by SK hynix. CXMT has reportedly delivered HBM3E samples to several domestic AI chip designers and expects to begin limited production within the next two months (planned, not yet implemented). It has provided customers with two versions: a standard design and a revised version incorporating changes aimed at improving manufacturing yields. Because a significant portion of chips must be discarded or reworked, low yields are expected to make CXMT's HBM3E more expensive to produce than comparable products from overseas competitors. CXMT reportedly began developing HBM technology internally as early as 2024. Testing cited by Reuters showed CXMT's HBM3E performed closer to SK hynix's previous-generation HBM3 than to its HBM3E, highlighting the technological gap with SK hynix, Samsung Electronics, and Micron. The report also notes China's shortage of advanced AI memory: Reuters noted in September that Huawei, Cambricon, MetaX, and Iluvatar CoreX had reportedly raised prices for current and next-generation AI chips by 20% to 50%, and Chinese chipmakers have increasingly relied on costly grey-market HBM supplies following tighter U.S. export restrictions. Per Seoul Economic Daily in September, citing The Information, Alibaba's chip design unit T-Head and Cambricon Technology were reportedly testing the memory; if development proceeds as planned, products incorporating CXMT's HBM3E could reach the market as early as 2027. Per Southern Metropolis Daily, CXMT management did not directly address the technology at a September investor briefing, saying only it would continue developing products and processes according to its existing roadmap; an analyst noted it remained unclear whether samples could meet domestic customers' requirements or how soon stable, large-scale production could be achieved.
An analysis article published 23 October 2026 reports that export controls keep ASML's most advanced EUV lithography machines out of China, so the country's chip industry relies on DUV lithography with multiple patterning to make advanced chips, at the cost of bigger dies, more defects, lower yields, longer manufacturing times and higher bills. Chris Mack, co-founder and CTO of Fractilia, said industry conventional wisdom held that three exposures on a 193 immersion tool cost about the same as one exposure on an EUV tool, and that at four masks EUV became more cost-effective. Teardowns of Huawei's Mate 60 Pro in 2023 found its Kirin 9000S processor made by SMIC using a second-generation 7nm-class process without EUV; analysis of Huawei's Kirin 9030 found SMIC had pushed its DUV-based process closer to 5nm-class density, though it continued to lag TSMC and Samsung leading processes. A June Morgan Stanley report estimated Chinese DRAM maker CXMT was producing only around one-third as many bits per wafer as Western competitors, with the older process node accounting for only about a third of that shortfall, and said access to lithography is a 'hard ceiling' on Chinese memory development. Micron's 1-alpha generation was developed without EUV, showing how far DUV can be stretched; Micron's newer 1-gamma DRAM process uses EUV, which Micron said achieves more than 30% greater bit density per wafer than its preceding 1-beta generation. Morgan Stanley assumes CXMT remains stuck on its 1-alpha process without EUV, yet raises its share of global DRAM bit supply from 14% in 2026 to 16% in 2028 by building more greenfield capacity, and expects China's AI chip self-sufficiency to rise from 42% in 2025 to 70% by 2030. Mack said he would be hard pressed to believe a three-nanometer or two-nanometer node is economically viable without EUV.
DUV lithographyEUV lithographyDRAMASML, SMIC and 7 totalTom's Hardware
The US Federal Communications Commission (FCC) has banned two electronic devices from entering the US market because both contain surveillance chips made by Huawei's HiSilicon. The move marks the first time the FCC has used a new rule targeting devices whose chipmakers are deemed national security risks; the source does not state further implementation details.
Huawei Technologies secured a seven-year, CNY15 billion offshore yuan loan from six Chinese banks as rising research spending and memory costs weigh on its cash flow. The financing is Huawei's first offshore syndicated borrowing since 2020, Bloomberg reported, citing a person familiar with the matter.
Nvidia's lead over Huawei in China's AI accelerator market has narrowed by 80% in a year. According to IDC, Huawei shipped 572,000 Ascend chips in the first half of 2026, securing a 28% market share, just 6 percentage points behind Nvidia, compared with a 31pp gap a year earlier. This brings CEO Jensen Huang's warnings about losing the US$50 billion AI chip market in China closer to reality. The source does not state the cause of the market share change.
AI acceleratorAscend chipsNvidia, HuaweiDigiTimes Asia
China smartphone shipments fell around 15%. The source states the cause: higher component costs (memory costs driving up smartphone prices) and longer replacement cycles weakened China's smartphone market. Meanwhile, Huawei recorded double-digit shipment growth.
The article lists ten leading Chinese semiconductor companies: SMIC is China's largest foundry with roughly $9.3 billion revenue in 2025; CXMT is the leading domestic DRAM maker with revenue surging past $8 billion; Huawei HiSilicon is the top chip design house (Kirin, Ascend AI, etc.); JCET Group is China's largest OSAT/packaging & testing firm; NAURA Technology Group is a leading semiconductor equipment maker; Hua Hong Semiconductor/Huahong Group is a major pure-play foundry focused on specialty/mature nodes; YMTC is the main domestic 3D NAND flash producer; Will Semiconductor (OmniVision) is a major image sensor and analog/design player; Tongfu Microelectronics is a second-tier but large packaging & testing company; and Cambricon Technologies or Hygon Information are leading AI accelerator or x86-compatible server CPU players respectively. The source does not state the cause, and no price movement, capacity change, or policy event is reported.
SMIC, CXMT and 11 totalElectronics Weekly
Related manufacturers
SMIC, CXMT, Huawei HiSilicon, JCET Group, NAURA Technology Group, Hua Hong Semiconductor, YMTC, Will Semiconductor, Tongfu Microelectronics, Cambricon Technologies, Hygon Information
According to a TrendForce post dated Oct 20, 2026, SiCarrier, reportedly Huawei-linked and previously in the headlines for its lithography claims, now says its tools are in mass production and used by Chinese fabs (a company claim), while unveiling new photomask tools and AI-powered wafer inspection tools. The source does not state the cause, nor any specific capacity figures or customer names.
photomask toolsAI-powered wafer inspection toolsSiCarrierTrendForce Official (Market Data)
DeepSeek is reportedly working closely with Huawei to influence the design of Huawei's future AI chips, a link reportedly closer than typical supplier-customer relationships. The collaboration shows the growing ties between two of China's largest technology firms to sidestep Nvidia. This is a reported collaboration whose status is unconfirmed; the source provides no specific product models, timeline, or volume figures.
According to Commercial Times, institutional investors remain optimistic about the memory industry's long-term outlook, supported by expanding AI inference demand and limited new supply of mature memory products, despite slowing gains; fourth-quarter DRAM contract prices in 2026 are expected to rise about 20% quarter-on-quarter. The projected increase marks a slowdown from approximately 80% in the second quarter and 40% in the third, which the report attributes to a higher comparison base, weakening end-market purchasing power, and price ceilings under long-term agreements (LTAs) gradually taking effect. CXMT has announced progress in its next-generation 4F² DRAM architecture, which institutional investors note could theoretically reduce memory cell area by about 33% compared with the mainstream 6F² design, though mass production still faces challenges involving yields, leakage current, and data retention; it remains unclear whether the 4F² design applies to the entire DRAM cell or only specific areas, with full commercialization generally expected after 2028, and MoneyToday notes CXMT's announcement has yet to significantly affect DRAM spot prices, which continue to rise. Per Chosun Biz, companies including Apple and Tesla have raised the possibility of turning to Chinese suppliers such as CXMT and YMTC as memory costs climb, though analysts see limited near-term price pressure given constraints on Chinese suppliers' pricing competitiveness, available volumes, and sales markets. According to Commercial Times, if NVIDIA switches Rubin Ultra from 12-Hi to 8-Hi HBM while keeping the number of stacks per GPU and capacity per DRAM layer unchanged, HBM capacity per GPU would fall by about 33%, while the same DRAM die supply could theoretically support 50% more GPUs; TrendForce notes 8-Hi HBM is expected to cost 10–20% more per Gb than 12-Hi in 2027. Institutional investors note that larger AI models, longer context windows, and growing KV cache requirements are driving demand for greater memory capacity and bandwidth, particularly server DRAM and enterprise SSDs.
DRAMHBMserver DRAMCXMT, NVIDIATrendForcePrice Movement
As China's semiconductor equipment makers showcase growing capabilities at WESEMIBAY, SiCarrier says, according to National Business Daily, that all its semiconductor equipment products have entered mass production and are already in use at multiple Chinese wafer fabs; the report notes that specific customer names, equipment installation numbers, and production volumes for individual models remain unconfirmed. At this year's exhibition, SiCarrier showcased two major product categories—process equipment and inspection and metrology systems—spanning diffusion, thin-film processing, optical inspection, and optical metrology; according to 21jingji, its equipment brochure revealed two previously unseen products: PMI (Liupan Mountain) for photomask defect inspection and mEBI (Jinggang Mountain) for AI-powered nanoscale wafer defect detection. According to Nikkei, SiCarrier, reportedly linked to Huawei and backed by the Shenzhen government, first gained attention for claiming it had developed critical lithography machines capable of producing 28nm chips. SiCarrier subsidiary Qiyunfang is broadening its EDA portfolio beyond the schematic and PCB design tools introduced last year toward a more comprehensive electronic design toolchain; per National Business Daily, its current EDA tools focus on schematic capture and PCB layout rather than chip-level EDA, with preliminary chip-level EDA research underway but no clear product roadmap yet; per Economic Observer, Qiyunfang's schematic and PCB design software has been adopted by more than 100 enterprise customers, with the number of engineers using the tools rising from 20,000 last year to 50,000. Subsidiary Long Sight's 90GHz ultra-high-speed real-time oscilloscope has entered commercial use, reportedly adopted by Huawei and other Chinese companies and research institutions per Mydrivers; several leading Chinese customers use it for R&D testing, and company representatives said demand is outpacing production capacity. The oscilloscope's 90GHz bandwidth ranks second globally and marks a breakthrough for China in a category subject to Western export restrictions on equipment exceeding 60GHz. Per Shanghai Securities News, Long Sight also introduced a 65GHz optical sampling oscilloscope for testing 1.6T optical modules and single-lane 200G interconnects, alongside a 110GHz spectrum analyzer for 6G research and 67/110GHz vector network analyzers, with the full lineup showcased at this year's WESEMIBAY.
semiconductor process equipmentinspection and metrology systemsphotomask defect inspection tool PMI (Liupan Mountain)SiCarrier, Qiyunfang and 3 totalTrendForce
Ahead of its October 31 earnings release, CXMT forecast revenue of RMB 265–270 billion for the first nine months of 2026, up more than sevenfold YoY, and at its October 19 extraordinary shareholders' meeting projected net profit attributable to shareholders of RMB 131–132.5 billion for the first nine months of 2026, a sharp reversal from a net loss of RMB 5.3 billion in the same period last year. According to Eastmoney, third-quarter net profit is expected to rise just 1–4% QoQ to RMB 53.40–54.90 billion, with Q3 revenue projected at RMB 114.69–119.69 billion, up 15.25–20.28% QoQ — a sharp slowdown from 1H26, when net profit more than doubled to RMB 52.84 billion in 2Q26. Eastmoney attributes the cooling momentum to moderating DRAM price gains, which may narrow room for further profit expansion. Per 36Kr, DDR and LPDDR ASPs climbed 61% and 24.46% YoY in 2025, driving revenue growth of 515.36% and 105.59% respectively; in 1H26, DDR and LPDDR revenue reached RMB 69.47 billion and RMB 78.19 billion respectively. Peer module maker Longsys saw net profit climb from RMB 3.86 billion in 1Q26 to RMB 6.72 billion in 2Q26, but its 3Q profit is expected at RMB 3.42–4.32 billion, a sequential decline of up to 49%. TrendForce projects more moderate contract price increases of 13–18% QoQ for conventional DRAM and 10–15% for NAND Flash in 3Q26, noting record-high memory prices are pushing PC and smartphone customers toward affordability limits. CXMT said its Hefei and Beijing fabs continue to run at high utilization with full order books; it currently operates two 12-inch DRAM fabs in Hefei and one in Beijing, each with monthly capacity of up to 100,000 wafers, is expanding its Hefei testing facility and developing new DRAM and HBM production lines in Shanghai, and its 1H26 depreciation expenses rose 27.85% YoY to RMB 14.51 billion. Whether CXMT can sustain earnings momentum hinges on its October 31 results and the trajectory of fourth-quarter DRAM prices.
According to Wccftech, at the 2026 Open Compute Project (OCP) Global Summit, Intel — which is expanding its silicon photonics capabilities as demand for high-bandwidth optical interconnects grows across AI and high-performance computing (HPC) — claimed to be the only high-volume foundry capable of supplying 300mm indium phosphide (InP) silicon photonics at scale to the broader industry; the technology is intended to support next-generation near-package optics (NPO) and co-packaged optics (CPO). The source notes that conventional InP substrates are generally limited to 150mm (6-inch) wafers, with 3-inch and 4-inch formats still widely used, and that InP crystals are brittle, grow slowly, and present defect-control challenges, limiting laser chip output per wafer and slowing capacity expansion; Intel integrates InP-based laser technology into its 300mm silicon photonics manufacturing platform, aiming to improve production efficiency and scalability. Per TrendForce, NVIDIA has begun shipping its Spectrum-X CPO switches to select partners (developed jointly with TSMC using its Compact Universal Photonic Engine (COUPE) technology), Broadcom continues limited shipments of its 51.2 Tb/s Bailly CPO switches, and at OCP 2026 showcased its third-generation Tomahawk 6-Davisson CPO switch with 102.4 Tb/s of switching capacity and 200 Gbps per channel; TSMC plans to begin production of its COUPE-on-substrate solution in 2026, targeting twice the power efficiency and a tenfold reduction in latency compared with board-level pluggable optics. Per ijiwei, Zhongji Innolight has established a dedicated CPO production line and begun small-volume production of 800G CPO optical modules; some customers have placed orders, with shipments potentially beginning in 2027 and broader adoption expected in 2028, and in September 2026 Huawei introduced its NPO-based Ascend 960 supernode for large-scale AI training and inference. TrendForce states that testing remains a key obstacle to CPO mass production: while optical alignment times have fallen to seconds or less, complete testing of a single photonic integrated circuit (PIC) can still take more than 100 seconds, shifting the bottleneck toward testing speed and cost; TrendForce expects 2027 to be a pivotal year for integrating CPO testing systems, with 2028 a critical period for assessing readiness for large-scale production.
Samsung Electronics is developing the Exynos 2700 for broader use across its Galaxy S27 lineup in 2027 (a plan, not yet implemented), while Huawei has moved its next-generation Kirin chips into testing. According to the source, these competing efforts are raising pressure on Samsung to improve application processor (AP) performance, manufacturing yields and cost competitiveness as it seeks to reduce its reliance on Qualcomm and MediaTek. The source does not state a specific cause beyond this competitive dynamic.
Huawei is betting on the Tau Scaling Law and LogicFolding to boost chip performance, bringing the technology to its Kirin 9050 Pro. But a Huawei scientist says EDA tools remain the biggest hurdle. Beyond this stated hurdle, the source does not state any other cause.
Kirin 9050 ProHuaweiTrendForce Official (Market Data)
According to Seoul Economic Daily (with ZDNet having reported in September that Samsung is pursuing a dual-track strategy for custom HBM, tapping both its own foundry and rival TSMC), NVIDIA has asked Samsung, SK hynix and Micron to adopt TSMC's 3nm process for the base dies of its NVHBM, unveiled in August. Samsung's Device Solutions (DS) division reportedly agreed to the requirements following an internal review. The stated causes are NVIDIA's push to standardize production across suppliers to ensure consistent HBM performance and simplify product validation; additionally, industry estimates place TSMC's 3nm yields above 90%, versus around 60% for Samsung Foundry's 2nm (SF2) process. NVHBM's custom base die integrates the memory controller traditionally housed in the GPU; according to NVIDIA, the technology offers up to 30% more memory bandwidth, 15% lower HBM power consumption and 25% more XPU compute die area than standard HBM4E. The partnership is not entirely new: according to Seoul Economic Daily, Samsung and TSMC first collaborated four years ago to ensure HBM compatibility with TSMC's GPU packaging process, and this latest tie-up extends into HBM manufacturing for the first time. Samsung is keeping its own foundry in play: with TSMC's 3nm capacity facing competing demand from AI accelerators and smartphone chips, Samsung is validating NVHBM base die production on its 2nm process as a potential alternative should TSMC face capacity constraints. TSMC flagged tight 3nm capacity at its October 15 earnings call, with the node accounting for 33% of third-quarter wafer sales, its largest share among all process nodes; according to Economic Daily News, Chairman and CEO C.C. Wei announced plans for another 3nm fab in Tainan, on top of existing expansion projects in Arizona, Japan's Kumamoto and Taiwan's Southern Taiwan Science Park, with the additional fab slated to begin mass production in the first half of 2028. Samsung also continues in-house base die production for its standard HBM lineup: HBM4, which entered mass production earlier this year, and HBM4E, now undergoing production validation, both use Samsung Foundry's 4nm process for base dies, while their core dies are manufactured on 1c DRAM lines at its Hwaseong and Pyeongtaek campuses; Samsung plans to maintain its turnkey approach to base die production for custom HBM supplied to other customers, including AMD.
NVHBMNVHBM base dieHBM4NVIDIA, TSMC and 5 totalTrendForcePartnership/M&A
Huawei scientist Huang Yu said at the October 15, 2026 Bay Area Chip Expo that EDA tools pose the biggest challenge to the Tau (τ) Scaling Law. Huawei formally introduced the Tau Scaling Law on May 25, 2026 at ISCAS 2026, and in October 2026 launched the Mate 90 series featuring the Kirin 9050 Pro chip based on LogicFolding technology, marking the theory's transition from concept to commercial product.
Rising memory prices and tightening supply are reportedly pushing some Chinese smartphone makers to turn to salvaged memory chips. According to TechNews, some brands are said to be sourcing memory chips recovered from discarded phones, potentially including used iPhones, through traders in Shenzhen's Huaqiangbei electronics market. Sources say memory procurement costs have surged, with some chips reportedly costing up to RMB 500 more per unit; the Shenzhen local government is also rumored to be offering smartphone brands subsidies of around RMB 300 per unit, leaving manufacturers to absorb roughly RMB 200. Unable to fully pass on the increases, some brands are reportedly cutting production and sales volumes to limit losses. TechNews notes the reported price increases, subsidies, and use of salvaged chips have yet to be confirmed by Chinese authorities or the companies involved, and such chips are largely limited to ultra-low-cost, unbranded smartphones and are unlikely to enter flagship supply chains. As background: TrendForce says AI server demand continues to squeeze DRAM supply, with shortages and price increases expected to persist into 2027; TrendForce projected global smartphone production would fall 14% year over year to approximately 1.07 billion units in 2026, a forecast revised upward due to earlier-than-expected purchases and restored production. Caijing's April investigation found a Shandong recycler purchased around 1,000 discarded phones in March and dismantled more than 600 for potential chip resale, with some nonfunctional devices reportedly fetching more than RMB 100 each; some recyclers preferred Android phones from OPPO, vivo, and Huawei, while sources told TechNews that Huaqiangbei traders primarily purchased used iPhones. A September STAR Market Daily investigation found refurbished chips can serve lower-end applications such as automotive accessories, IoT devices, and overseas refurbished phones, but analysts cautioned that salvaged chips face yield losses and compatibility risks, and recycling premiums could quickly disappear if major chipmakers adjust production.