In a latest update, ChangXin Memory Technologies (CXMT)—China’s largest manufacturer of dynamic random-access memory (DRAM) chips has filed a lawsuit in the U.S. District Court for the District of Columbia against the Pentagon, seeking to overturn its designation as a “Chinese military company.”

The lawsuit names U.S. Defense Secretary Pete Hegseth and other senior defense officials as defendants.

CXMT argues that the classification, made under Section 1260H of the National Defense Authorization Act, is “arbitrary,” lacks evidentiary support, and violates due-process rights.

In its federal lawsuit, CXMT stated: “CXMT is not affiliated with the Chinese military. It designs, produces, and sells its DRAM chips for civilian and commercial use, not for military use.”

The company maintains that it is strictly a commercial enterprise that designs, produces, and sells DRAM chips for civilian applications, including smartphones, personal computers, servers, and other electronics. 

A History of 'Flip-Flopping'

CXMT’s legal challenge comes after a confusing sequence of events surrounding its designation.

The Pentagon initially designated CXMT as a “Chinese military company” in January 2025 under the Biden administration.

According to Reuters, the Pentagon first designated CXMT as a Chinese military company under the Biden administration, while the Trump administration retained the company on the list in its June 2026 update.

In February 2026, the Pentagon briefly published a notice indicating that CXMT would be removed from the list.

The notice was withdrawn the same day, however, leaving the company’s status unchanged.

The company argues that the reversal was not adequately explained.

While a Section 1260H designation does not itself prohibit private commercial sales of a company’s products, it can prevent the company from receiving certain U.S. government contracts and create significant reputational and commercial risks. 

As reported such a designation can also increase scrutiny from investors, suppliers, and other governments and potentially contribute to pressure for broader trade restrictions.

Why it matters:

CXMT’s legal strategy mirrors challenges brought by other major Chinese companies. Alibaba has also challenged its designation, while Xiaomi previously succeeded in forcing the U.S. government to rescind its military-company designation through the U.S. federal court system.

“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 is pursuing the lawsuit to protect its business interests.

CXMT is China’s leading maker of DRAM chips, which are widely used in smartphones, personal computers, servers, artificial intelligence (AI) technology systems, and other electronic devices.

The company’s revenue surged 874% in the first half of the year, highlighting its rapid growth as a major Chinese semiconductor manufacturer. CXMT hopes to enter the U.S. market over the long term.

The lawsuit now puts the Pentagon’s decision under judicial scrutiny and could become an important test of how the U.S. government applies Section 1260H to major Chinese technology companies.