Changxin Memory Technologies (CXMT), China's leading DRAM player and this year's biggest "big fish" in Asia's initial public offering (IPO) market, has finalized its offer price, putting it on the verge of listing. As demand for memory chips surges with the spread of artificial intelligence (AI), Changxin Memory is seen as a symbol of China's semiconductor push, and the market said this listing will serve as a test to gauge China's progress toward semiconductor self-reliance.
According to the filing, Changxin Memory on the 14th set its IPO price for a listing on the Shanghai Stock Exchange's STAR Market (科创板) at 8.66 yuan per share (about 1,895 won). The offering could reach as much as 66.6 billion yuan (about 14.5961 trillion won). That is twice market expectations and the second largest in China's history. Based on the offer price, the corporations value was put at about 579.2 billion yuan (about 127 trillion won).
Changxin Memory on the 16th began taking IPO subscriptions from retail and institutional investors. The exact listing date has not yet been disclosed, but the market expects it to be on the 27th of this month. Wu Zhou, a fund manager at Shenzhen Deyuan Investment, told Reuters, "Changxin Memory's corporations value could reach 3 trillion yuan (about 657 trillion won) to as much as 5 trillion yuan (about 1,095 trillion won) after listing." Changxin Memory plans to use the funds raised to expand production capacity and advance its processes.
◇ Grew into the world's No. 4 DRAM maker… also turned profitable
Changxin Memory, founded in 2016, is China's largest DRAM chip manufacturer. The Chinese government actively fostered it with the goal of semiconductor self-reliance. DRAM is a memory chip that stores short-term data in electronic devices such as smartphones, PCs, servers, and AI systems. Changxin Memory currently has a 7.7% share of the global DRAM market, having grown into the world's No. 4 player after Samsung Electronics, SK hynix, and Micron. In China, it is also the only company capable of mass-producing DRAM.
Fueled by the global memory chip supercycle that began last year, the company's growth is steepening. As large-capacity DRAMs are widely installed in AI servers and data centers, memory demand has surged, pushing up memory prices and boosting industry investment.
On the back of that, Changxin Memory's first-quarter revenue this year came in at 50.8 billion yuan (about 11.1246 trillion won), up 719% from a year earlier. First-half revenue is expected to reach 110 billion to 120 billion yuan (about 24 trillion to 26 trillion won), roughly double last year's annual revenue (61.8 billion yuan, about 13.5391 trillion won).
Profitability has also improved rapidly. First-quarter net profit this year swung to a surplus of 25 billion yuan (about 5.4755 trillion won) from a loss of 1.6 billion yuan (about 350.4 billion won) a year earlier. Full-year net profit is projected to reach 100 billion yuan (about 22 trillion won).
Until now, many Chinese semiconductor firms were seen as relying on government subsidies and running deficits, but assessments say Changxin Memory used the AI boom to improve both results and profitability. The Wall Street Journal (WSJ) said, "The first-half net profit margin is expected to exceed 45%, which is profitability on par with Samsung Electronics, SK hynix, and Micron during the semiconductor boom."
◇ Test of China's "semiconductor self-reliance"… HBM and U.S. sanctions are challenges
The market views this listing as more than just a capital raise, because of Changxin Memory's role in China's semiconductor industry. Spurred by the U.S.-China trade dispute in 2018, the Chinese government elevated semiconductor self-reliance to a national strategy and expanded investment and support to reduce dependence on overseas corporations. As the United States tightened export controls on advanced chips, this trend accelerated further.
The Chinese government has provided policy support to domestic chipmakers such as Changxin Memory and injected large amounts of state capital. According to the prospectus, state-affiliated shareholders hold more than 36% of Changxin Memory's equity. In addition, as U.S.-China tensions made it harder to procure foreign products, demand from Chinese corporations turning to domestic products also underpinned the company's growth.
On Changxin Memory's listing, the WSJ called it "one of the Chinese government's boldest attempts to challenge the oligopolistic structure of the global memory market and build self-reliance in the chip supply chain," while Reuters said it "will be a test of whether China can cultivate competitive domestic corporations in the DRAM industry dominated by foreign companies."
However, the technology gap with leading players remains a challenge. While Changxin Memory is quickly expanding share in the commodity DRAM market, it lags Samsung Electronics, SK hynix, and Micron in high-bandwidth memory (HBM), the key memory for AI Semiconductor.
U.S. export controls on advanced chipmaking equipment are also cited as an obstacle to technological advancement. Reuters said, "Due to U.S. restrictions, Changxin Memory has found it harder to secure cutting-edge chip manufacturing tools from companies such as ASML, limiting its ability to narrow the technology gap with global rivals," adding, "Geopolitical risks also remain, as the U.S. Ministry of National Defense last month designated Changxin Memory as a 'Chinese military corporations.'"