China's NAND flash company YMTC is moving to pursue an IPO worth 33 billion yuan (about 6.82 trillion won). Following DRAM company CXMT's large IPO last month, YMTC is also seeking to secure funds to投入 into production lines and research and development (R&D), extending the wave of investment expansions by China's memory companies.
According to the Shanghai Stock Exchange on the 22nd, the Sci-Tech Innovation Board (STAR Market) IPO application of YMTC's parent CCSH Corporation was accepted by the exchange the previous day. The STAR Market is a science and technology stock market focused on high-tech corporations and is called the "Chinese Nasdaq."
CCSH is the listing entity, but the core business is handled by its wholly owned subsidiary YMTC. YMTC is known to account for more than 90% of the group's revenue. CCSH plans to raise 33 billion yuan through this IPO. Of that, 20.8 billion yuan (about 4.3 trillion won) will go to upgrading YMTC's production line technology, and the remaining 12.2 billion yuan (about 2.52 trillion won) will be投入 into next-generation NAND flash and high-speed storage products and other R&D.
The planned size of the new share issuance is 1.98 billion to 2.43 billion shares. After listing, the corporate value is estimated at 275 billion to 330 billion yuan (about 56.8 trillion to 68.15 trillion won). The fundraising scale would be the third largest ever on the STAR Market after CXMT and China's largest foundry SMIC. The industry expects the listing could take place as early as the fourth quarter of this year.
YMTC's results also surged. According to the prospectus, CCSH's first-quarter revenue this year was 47.042 billion yuan (about 9.72 trillion won), and net profit attributable to controlling shareholders was 33.379 billion yuan (about 6.89 trillion won). Last year's full-year revenue was 63.185 billion yuan (about 13.05 trillion won), and net profit was 14.211 billion yuan (about 2.93 trillion won).
Stronger demand for enterprise storage driven by increased investment in artificial intelligence (AI) data centers and higher NAND prices boosted results. YMTC's average selling price (ASP) for NAND in the first quarter rose 173% from last year's average. The gross margin also climbed from 35.3% last year to 76.8% in the first quarter of this year.
YMTC's shipments are also increasing in the global NAND market. According to market researcher Counterpoint Research, by shipment volume in the second quarter of this year, YMTC took third place for the first time in the global NAND market with a 14% share, overtaking Kioxia. However, by revenue it remained in fifth place. By shipment volume, Samsung Electronics kept first place with 25%, and SK hynix, including Solidigm, took second with 22%.
YMTC cited gaps with leading players in production capacity and overseas business as investment risk factors. It said large-scale capacity expansion and production line upgrade investments will continue to be needed, and product prices could fall as NAND supply increases and demand growth slows.
YMTC is on the U.S. Department of Defense's "1260H list," which identifies corporations supporting China's military, and on the U.S. Department of Commerce's export restriction entity list. The company said geopolitical factors have constrained its overseas market expansion.
Earlier, China's DRAM company CXMT raised up to 66.61 billion yuan (about 13.76 trillion won) through an IPO last month. Adding YMTC's planned amount, the funds raised or to be raised through IPOs by China's leading DRAM and NAND companies total about 20.57 trillion won.