CXMT IPO Signals China's Increasing Seriousness in Pursuing Chip Independence

China has given the final green light for Chengxin Memory Technology or CXMT to list on the Shanghai Stock Exchange. The IPO of the memory chip giant is expected to be the largest in mainland China since 2022.

As reported by Yicai Global quoted Monday, June 15, the registration of CXMT's IPO was received on June 12. That means the China Securities Regulatory Commission (CSRC) has approved the company's listing plan on the Star Market, a trading board for technology companies on the Shanghai Stock Exchange that is similar to the Nasdaq in the United States.

The Hefei-based company plans to issue 10.6 billion shares. Its funding target reaches 29.5 billion yuan or around 4.4 billion US dollars. This value will also make CXMT's IPO the second largest on the Star Market.

CXMT is said to be the only Chinese integrated device manufacturer that has been able to produce DRAM on a large scale. An integrated device manufacturer is a company that handles the main process of chip production, from design to manufacturing.

DRAM is the main memory chip used in computers, mobile phones, servers, and various electronic devices.

CXMT's IPO attracted the interest of a number of large securities companies and insurance funds. Among them are China Merchants Securities and Hua'an Securities. They entered through various investment channels, including alternative investment subsidiaries, private equity funds, and industry funds.

The listing of CXMT shares is expected to strengthen China's memory chip supply chain. The effect could touch many layers of the industry, from raw materials, production machines, components, packaging, testing, to end applications.

CXMT currently has three 12-inch DRAM wafer plants in Hefei and Beijing. Wafer is a thin semiconductor slab that is the basis for chip production. CXMT's production capacity ranks first in China and fourth in the world.

In the same report, Yicai Global said the CXMT industry chain involves more than 30 supplier companies listed on the mainland Chinese stock exchange. The total market value of these companies combined is more than 3 trillion yuan or about 444 billion US dollars.

The size of the supply chain can be seen from the purchase of CXMT raw materials. Last year, the company purchased raw materials worth 11.5 billion yuan.

The details are, chemicals 4.3 billion yuan, photoresist 1.4 billion yuan, silicon wafers 980 million yuan, special electronic gas 590 million yuan, and target material 250 million yuan. Photoresist is a light-sensitive material used to print circuit patterns on chips.

The listing of CXMT shares is expected to contribute to the development of China's memory chip industry, from raw material and equipment suppliers to downstream applications.