CXMT sues Pentagon over 1260H listing as revenue surges 874%

CXMT, the world's fourth-largest DRAM maker, sued the Pentagon on Aug. 28 over its 1260H designation, joining a wave of Chinese companies challenging a list that grew from 134 to 188 firms in 18 months.

"CXMT is not a military company and has no affiliation with the Chinese military," the Hefei-based company said in a statement, adding that its DRAM chips are designed for civilian and commercial use only. The complaint names Defense Secretary Pete Hegseth, Deputy Defense Secretary Steve Feinberg, and Assistant Secretary of Defense Michael Cadenazzi as defendants.

The lawsuit, filed in the U.S. District Court for the District of Columbia, alleges the Pentagon's decision was "arbitrary," lacked evidentiary support, and violated due process. CXMT was first designated in January 2025 under the Biden administration. The Pentagon published a removal notice in February 2026 but withdrew it the same day, then relisted the company in June without explanation. CXMT says it spent more than a year providing information to challenge the designation.

The stakes extend beyond CXMT's reputation. The company announced LPDDR6 memory mass production the same day it filed suit, with peak transfer rates of 12,800 Mbps and 16GB per-chip capacity, debuting in the Xiaomi 18 Fold in September. First-half 2026 revenue surged 874 percent year-over-year, and Apple has been actively seeking to procure CXMT's chips for devices sold in China — a move opposed by some U.S. senators.

Legal Precedents Favor Challengers

Chinese companies have achieved staged victories against the 1260H list through U.S. courts. Xiaomi won a preliminary injunction in 2021, and the Pentagon rescinded its designation two months later. Advanced Micro-Fabrication Equipment Inc. China was formally removed four months after filing suit in August 2024. WuXi AppTec won a preliminary injunction in August 2026 after the court found the Defense Department had misread a fund's 5.32 percent asset allocation as a 5.32 percent shareholding — the actual stake was approximately 0.001 percent. Hesai Technology won at the appellate stage on Aug. 18, with the court ruling the Pentagon failed to provide evidence before listing and denied the company due process under the Fifth Amendment. Alibaba's June lawsuit remains pending.

The 1260H list itself does not freeze assets or prohibit commercial dealings, but Congress has progressively linked government procurement and funding policies to it. For U.S. investors, designation serves as a warning signal that more severe trade restrictions could follow — the list is widely read as a precursor to the Commerce Department's Entity List, which does restrict trade.

Business Momentum Uninterrupted

CXMT's legal battle has not slowed its commercial trajectory. The company listed in Shanghai on July 27 at RMB 8.66 per share, opening 471 percent higher. Seventeen days later, it passed Tencent to become China's most valuable listed company at approximately RMB 3.54 trillion. Reuters reported first-half 2026 revenue up 874 percent year-over-year, making CXMT the world's fourth-largest DRAM manufacturer behind Samsung, SK hynix, and Micron.

Memory prices have quadrupled in three quarters as the three incumbents shifted capacity toward AI data centers, creating a supply gap CXMT is positioned to fill. Apple, which does not currently require special permission to buy from CXMT since the company is not on the Entity List, is lobbying the White House for political clearance to avoid pressure from U.S. senators. Nvidia CEO Jensen Huang has called U.S. AI chip export controls on China "a failure," noting they cost American companies billions in lost sales while failing to halt China's chip self-sufficiency push.

CXMT shares rose 1.2 percent on the Shanghai exchange following the filing, as investors weighed the legal risk against the company's growth trajectory. The case now joins a growing body of litigation testing whether the Pentagon can designate companies without evidence — a question with direct implications for every Chinese firm on the list and every U.S. company that buys from them.

This article is for informational purposes only and does not constitute investment advice.