Chinese memory chip manufacturer CXMT is set to take a major step toward an initial public offering (IPO) next week. The company aims to raise at least 29.5 billion yuan (approximately $4.3 billion) through a listing on the STAR Board in Shanghai. This would make it the largest IPO on the Chinese mainland since 2022.
According to Bloomberg, CXMT is offering 6.688 billion shares, half of which are reserved for so-called cornerstone investors. If the option to issue additional shares is fully exercised, the offering will grow to 7.69 billion shares. In that scenario, the proceeds could exceed $5 billion.
The IPO is seen as a key test of investor confidence in the Chinese semiconductor sector. Beijing has been investing heavily in the development of its own chip industry for some time, partly to reduce dependence on foreign suppliers. Against this backdrop, CXMT has emerged as one of the key players in the national technology strategy.
Capital for expansion
CXMT specializes in DRAM memory, a type of random-access memory used, among other things, for processing AI workloads. The company is now one of the four largest DRAM manufacturers in the world and competes with established names such as Samsung Electronics and SK hynix.
The proceeds from the IPO are intended to expand production capacity and further develop the company’s proprietary DRAM technology. To that end, the company plans to invest in its wafer fabs in Hefei, in China’s Anhui province.
Interest in Chinese chip companies has surged recently. Not only chip manufacturers but also companies active in other parts of the AI supply chain are seeking financing through the capital markets to scale up their production and development. The sustained demand for AI infrastructure plays a key role in this.
According to Bloomberg, Apple is also trying to obtain permission from the U.S. government to purchase memory chips from CXMT, despite the fact that the company is on a U.S. Department of Defense blacklist. Such an agreement could significantly strengthen CXMT’s international position and, at the same time, highlights just how tight the market for memory chips currently is.
Interest in memory manufacturers remains high even outside China. According to Bloomberg, SK hynix’s recent initial public offering (IPO) in the United States was oversubscribed by more than seven times, indicating sustained demand from institutional investors for companies benefiting from the growth of AI.
Accelerated approval process
Preparations for the IPO proceeded relatively quickly. Less than a month ago, CXMT received approval from the Chinese regulator, completing a process that took just over seven months. The company took advantage of a new expedited review process for companies that develop strategically important technology and apply for a listing on the STAR Board.
The preliminary book-building process begins on July 13. Two days later, the final offering price and terms will be announced. Institutional and retail investors can then participate in the subscription until July 20. Approximately 10 percent of the shares are reserved for retail investors.