Chinese memory semiconductor company CXMTHe filed a lawsuit against the U.S. Department of Defense in federal court. It is a request for the U.S. government to reverse its decision to include the company on the list of “China-linked military companies” and to remove it from the list.
CXMT claimed that its DRAM is designed and manufactured for civilian and commercial use and has no ties to the Chinese military. The company argues that the Ministry of National Defense’s decision lacks sufficient grounds and that due process was not followed.
This designation is not exactly the same as comprehensive sanctions that immediately block all transactions. However, this is a significant legal dispute for CXMT, which is aiming to enter the U.S. market, as it could lead to restrictions on U.S. government contracts and increase reputational and transactional risks.
| Lawsuit Filed in Federal Court in Washington, D.C.
On August 28, CXMT filed a complaint with the U.S. District Court for the District of Columbia. The defendants included the U.S. Department of Defense, the Secretary of Defense, and senior officials of the Department of Defense.
The company asked the court to declare the Ministry of National Defense's designation invalid and to order that the company be removed from the relevant list. While it has been confirmed that a lawsuit has been filed and that the company has made its case, the court has not yet decided which side it will rule in favor of.
The U.S. Department of Defense told Reuters that it does not comment on ongoing litigation. Therefore, the specific arguments in its rebuttal that have been made public so far will need to be verified in court documents to be filed in the future.
| CXMT claims that its semiconductors are commercial products with no military applications
CXMT stated that it designs and sells DRAM—used in smartphones, PCs, servers, and AI systems—for civilian and commercial purposes. The company maintains that it has no organized ties to the Chinese military and does not operate its business to produce military products.
They also argued that the Ministry of National Defense's decision was arbitrary, not supported by evidence, and violated their right to due process. This is, after all, merely the legal argument put forward by the plaintiff, CXMT, and the facts of the case will be examined during the trial.
The Ministry of National Defense first designated CXMT in January 2025 and retained the company on the updated list in June 2026. CXMT explained that it had provided information for over a year while requesting that the designation be revoked.
| 1260H Roster
The subject of this dispute is the U.S. National Defense Authorization Act Section 1260HThis is a list of Chinese military-related companies based on [source]. It is a system that publicly identifies companies operating in the United States that the Department of Defense has determined are contributing to China's military and defense industrial base.
Being included on this list does not mean that all transactions with U.S. companies are immediately prohibited. It is important to distinguish between this list and the Department of Commerce’s Entity List or the Department of the Treasury’s financial sanctions, as they do not have the same legal effect.
However, restrictions will be placed on the Ministry of National Defense’s direct procurement and contracting, and this could gradually affect indirect procurement within the supply chain as well. Since private companies may also scale back their transactions to avoid regulatory risks, the actual impact on business could be greater than the wording of the list suggests.
| The U.S. Market and Customer Trust
CXMT has grown to become China's largest DRAM manufacturer and is also exploring the possibility of entering the U.S. market in the long term. However, if the designation as a defense-related company remains in place, it could put the company at a disadvantage not only in its dealings with the U.S. government and the defense supply chain but also in the procurement reviews conducted by its general customers.
Memory is used in nearly all electronic devices, from smartphones to data centers. Since clients verify export controls, procurement restrictions, and the potential for future sanctions before entering into long-term supply contracts, the designation itself can pose a contractual risk.
CXMT claimed that it has continued to suffer reputational and commercial damage since its initial designation in January 2025. This lawsuit can be seen as a response aimed at restoring its legal reputation and reducing the uncertainty surrounding its ability to secure overseas customers.
| There were also claims that the notice of withdrawal disappeared just one day later
CXMT claimed that the Department of Defense had issued a notice stating it planned to remove the company from the list in February 2026, but then retracted it on the same day. The company explained that it included the employee on the June renewal list again without providing a sufficient explanation.
This point could be linked to the legal issue of whether the administrative agency made its decision in a consistent and reasonable manner. The court is likely to examine what evidence the Ministry of National Defense relied on in reaching its decision and whether it fulfilled its procedural and explanatory obligations.
Since judgments related to national security may involve classified information, the evidence available in an open trial may be limited. Another key factor is the extent to which the court will respect the executive branch’s discretion.
| Other Chinese companies
Xiaomi has a history of being removed from the list after filing a lawsuit against a similar military-related designation in 2021. Recently, several Chinese tech companies have also been challenging the 1260H designation in court.
However, the basis for designation, the evidence submitted, and the date of the list applied vary from company to company. Past victories do not guarantee an automatic win for CXMT.
Going forward, we’ll have to wait and see what the Ministry of National Defense says in its response, how the court handles the confidential materials, whether interim relief is granted, and what the final ruling will be. This lawsuit could serve as a case study that goes beyond the issues facing CXMT alone to demonstrate the extent to which the U.S. process for classifying Chinese technology companies is scrutinized in court.
References
Tags
#CXMT #U.S. Department of Defense #Pentagon #Companies Linked to the Chinese Military #Section1260H #U.S.-China Technology Conflict #Semiconductor Regulations #DRAM #Chinese Semiconductors #Industrial Policy #U.S. Federal Court #Supply Chain Regulations
