China's largest DRAM manufacturer, CXMT (Changxin Memory Technologies), made its debut on the Shanghai Stock Exchange on July 27, achieving a remarkable milestone by becoming the top company by market capitalization in mainland China.
CXMT (688825.SH) was listed on the STAR Market, issuing 6.688 billion new shares at an initial price of 8.66 yuan, raising 57.9 billion yuan. If the overallotment option is fully exercised within a month, the total fundraising could reach up to 66.6 billion yuan (approximately 14.4 trillion won). Market analysts expect the overallotment option to be fully utilized.
Shortly after opening, CXMT's stock price surged to 49.88 yuan, marking a 476% increase from the initial offering price. On the morning of July 27, the stock was trading around 49 yuan. The STAR Market allows for unrestricted price fluctuations during the first five trading days.
With its listing, CXMT's market capitalization reached 3.14 trillion yuan, surpassing the previous leader, Industrial and Commercial Bank of China (ICBC), which had a market cap of 2.75 trillion yuan. This IPO is the largest in Asia this year and ranks as the second-largest for a Chinese semiconductor company, following the Agricultural Bank of China's $10 billion IPO in 2010.
CXMT to Raise 666 Billion Yuan for Expansion and R&D
Through this IPO, CXMT aims to raise up to 666 billion yuan. Additionally, the company's net profit for the first half of the year is projected to reach 57 billion yuan. Combining the IPO proceeds with the expected net profit, CXMT could have a total of 123.6 billion yuan in cash, equivalent to about 27 trillion won, most of which is anticipated to be invested in HBM.
In its prospectus, CXMT stated that the funds will be used for expanding production capacity and increasing research and development. However, no specific investment plans were disclosed. Industry insiders believe that a significant portion of the R&D investment will focus on HBM, AI-oriented DRAM, and advanced packaging, as HBM is currently the most critical memory type needed in China.
CXMT began developing HBM in 2023 and plans to start mass production of 4-layer HBM2 in 2024, with an aim to produce 8-layer HBM3 by the end of this year. According to Taiwanese IT publication Digitimes, CXMT has set a goal to produce 12-layer HBM3E next year.
Technology Gap with SK Hynix Expected to Narrow
SK Hynix has started mass production of HBM4 this year, while CXMT is preparing for HBM3 production, indicating a current technology gap of about four years between the two companies. Analysts from Chinese securities firms believe that with substantial cash reserves, government support, and explosive demand from Chinese AI companies, CXMT's technological capabilities could advance significantly. There are even projections that the technology gap with SK Hynix could narrow to two years.
Last year, CXMT recorded revenues of 61.7 billion yuan and a net profit of 7.1 billion yuan, marking its first annual profit since its establishment. In the first quarter of this year, the company reported revenues of 50.8 billion yuan and a net profit of 33 billion yuan, with expectations for a net profit of 57 billion yuan for the first half of the year.
* This article has been translated by AI.
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