CXMT’s $85B IPO set to become China’s biggest chip listing
▼ Summary
– CXMT, China’s largest memory chipmaker, is launching a Shanghai IPO priced at 8.66 yuan per share, aiming to raise about 57.9 billion yuan ($8.5bn), which would be the largest listing by a Chinese semiconductor company on a mainland exchange.
– Founded in 2016 with state backing, CXMT produces DRAM memory and holds an estimated 7.7% of the global market, with customers including Alibaba, Tencent, and ByteDance.
– The company’s revenue surged over 700% year-on-year in the first quarter to 50.8 billion yuan ($7.4bn), driven by AI-related demand and higher DRAM prices.
– The Pentagon added CXMT to its “Chinese military companies” list, and a US interagency committee cleared it for the Entity List, though the trade blacklist step has not yet taken effect.
– The IPO raise of nearly double the 29.5 billion yuan earmarked for investments provides a war chest for capacity expansion and a financial cushion amid potential US export controls.
China’s leading memory chipmaker is set to make a historic entrance into the public markets. ChangXin Memory Technologies (CXMT) has priced its Shanghai initial public offering at 8.66 yuan ($1.28) per share, according to the South China Morning Post. The offering is expected to raise approximately 57.9 billion yuan, or $8.5 billion.
That sum would mark the largest listing by a Chinese semiconductor company on a mainland exchange, surpassing the previous record held by SMIC, which raised 53.23 billion yuan in Shanghai back in 2020.
CXMT is offering nearly 6.7 billion shares, representing about 10% of the company. At that valuation, the Hefei-based firm would be worth 579 billion yuan, or roughly $85 billion, when it begins trading on Shanghai’s Star Market. An additional 15% overallotment option could push total proceeds to 66.6 billion yuan ($9.8 billion). Subscriptions open on Thursday, though CXMT has not yet announced a trading date.
A state-backed memory powerhouse
Founded in 2016 with government support, CXMT was created to challenge global giants like Samsung, SK Hynix, and Micron. The company specializes in DRAM, the essential working memory found in smartphones, PCs, and servers. It now commands an estimated 7.7% share of the global DRAM market.
Its client list reads like a who’s who of Chinese technology. Alibaba, Tencent, and ByteDance all purchase its chips. The company has benefited from an AI-driven memory shortage that has driven DRAM prices sharply higher in recent quarters.
Growth has been explosive. In the first quarter, CXMT’s revenue surged more than 700% year over year to 50.8 billion yuan ($7.4 billion). It also swung to a substantial profit, according to reports based on its filings.
Washington’s watchful eye
The timing of the IPO is significant. Last month, the Pentagon added CXMT to its list of “Chinese military companies.” Reuters has also reported that a US interagency committee cleared the chipmaker for inclusion on the Commerce Department’s Entity List, a trade blacklist. That designation has not yet taken effect.
A public listing raises the stakes considerably. CXMT still relies on foreign equipment to manufacture its chips, and US export controls limit its access to advanced machinery from suppliers like ASML. Going public now allows the company to raise capital domestically while it still has the opportunity.
The fundraising total far exceeds CXMT’s stated needs. The company earmarked 29.5 billion yuan for investment projects in its prospectus. The offering will bring in nearly double that amount. The extra capital provides room to expand capacity and acts as a financial cushion if Washington tightens restrictions further.
For Beijing, the deal represents a milestone in its push for semiconductor self-sufficiency. For CXMT, it is a war chest raised at the peak of a memory boom, just ahead of a potential blacklist that could make future fundraising far more difficult.
(Source: The Next Web)
