China’s CXMT Sues Pentagon Over Military Blacklist Amid Escalating Chip Tensions

China's leading memory-chip manufacturer ChangXin Memory Technologies has sued the U.S. Department of Defense to overturn its designation as a Chinese military company, escalating a dispute that could further complicate Beijing's efforts to expand its semiconductor industry and gain access to global markets.

CXMT filed the lawsuit on Friday in the U.S. District Court for the District of Columbia, arguing that the Pentagon lacked sufficient evidence to place the company on its list of Chinese entities deemed to support Beijing's military.

"CXMT is not affiliated with the Chinese military," the company said in its complaint. "CXMT designs, produces, and sells its DRAM chips for civilian and commercial use, not for military use."

The company said the designation had caused significant commercial and reputational damage since it was first imposed in January 2025 and is seeking an order removing its name from the Pentagon's list.

"Since its initial designation in January 2025, CXMT has continuously suffered reputational and commercial harm," the company said in a statement to Reuters, adding that it filed the lawsuit to protect its business interests.

The Pentagon designated CXMT under the Biden administration, and President Donald Trump's administration retained the company on the list in an update issued in June. The designation can expose companies to restrictions involving U.S. government contracting and make it more difficult to establish commercial relationships with American businesses.

But the stakes extend beyond government contracts for CXMT. The company has ambitions to expand internationally and eventually enter the U.S. market, making its continued presence on the Pentagon list a potential obstacle to customers, suppliers, and investors concerned about regulatory risk.

CXMT argues that the Pentagon's decision was "arbitrary," lacked adequate evidentiary support, and violated the company's due-process rights.

According to the complaint, CXMT spent more than a year providing information to the Defense Department in an effort to have its designation overturned.

The company said the Pentagon published a notice in February indicating that CXMT would be removed from the list, only to withdraw the notice the same day. CXMT alleges that the department later failed to adequately explain why it reversed course and retained the company on the blacklist.

"None of these determinations is supported by the factual record, by applicable law, or by reasoned decision-making," CXMT said.

The dispute illustrates the uncertainty facing Chinese technology companies operating under Washington's increasingly expansive national-security restrictions. Companies can face commercial consequences even when a designation does not amount to a direct ban on selling products in the United States.

CXMT's challenge also comes as Washington continues to treat advanced semiconductors and related manufacturing capabilities as strategic assets. Memory chips are an important component of smartphones, computers, servers and artificial intelligence systems, making leading manufacturers relevant to the broader U.S.-China technology rivalry.

Rapid Growth Raises CXMT's Profile

CXMT has emerged as China's most important domestic producer of dynamic random-access memory, or DRAM, chips, a market historically dominated by companies such as Samsung Electronics, SK Hynix and Micron Technology.

Its rise is significant for China's push to reduce dependence on foreign semiconductor suppliers. Washington has imposed restrictions on China's access to advanced chip technology, equipment and other semiconductor inputs, while Beijing has encouraged domestic companies to develop alternatives.

CXMT's revenue surged 874% in the first half, underscoring the rapid expansion of its business as Chinese electronics and technology companies seek locally produced memory chips. The company has also been expanding its product portfolio. Its growth in DRAM has increased its strategic importance to China's semiconductor ambitions, particularly as demand for memory rises alongside spending on artificial intelligence infrastructure.

That progress, however, has brought greater scrutiny from Washington.

The United States has used export controls, investment restrictions and military-related company designations as tools to limit China's ability to develop technologies considered important to national security. Beijing, in turn, has accelerated efforts to build domestic semiconductor supply chains.

Another Legal Front in U.S.-China Tech War

CXMT's lawsuit follows a growing number of legal challenges by Chinese companies seeking to contest U.S. government restrictions. In June, Alibaba sued the U.S. government over its inclusion on the Pentagon's Chinese military company list. Xiaomi, the Chinese smartphone and electric-vehicle manufacturer, successfully challenged its own designation in U.S. court and was removed from the list in 2021.

Those cases offer CXMT a potential legal precedent, although the outcome will depend on the evidence supporting its designation and the Pentagon's statutory authority.

CXMT's complaint names Defense Secretary Pete Hegseth, Deputy Defense Secretary Steve Feinberg, and Assistant Secretary of Defense for Industrial Base Policy Michael Cadenazzi, in addition to the Department of Defense.

The case is expected to become an important test of how far the Pentagon can go in designating Chinese technology companies as military-linked entities and how much evidence it must provide when companies challenge those decisions.

However, analysts have noted that removal from the list would have implications beyond CXMT's legal standing. It could help reduce the regulatory risk associated with dealing with the company and strengthen its efforts to establish itself as a globally competitive memory-chip supplier.

CXMT's challenge has come at a time when the semiconductor industry is becoming divided along geopolitical lines. China is investing heavily in domestic chip production, while the United States and its allies are tightening controls on technologies they consider strategically sensitive.