China's DRAM Giant CXMT Gets Final Nod For Largest Mainland IPO Since 2022

Chengxin Memory Technology, China’s leading maker of DRAM (dynamic random-access memory) chips, has had its initial public offering approved by the country’s securities watchdog, clearing the way for the Chinese mainland’s biggest stock market listing since 2022.

CXMT’s registration to go public on Shanghai’s Nasdaq-style Star Market became effective on June 12. The Hefei-based company is planning to raise CNY29.5 billion (USD4.4 billion) by issuing 10.6 billion shares, which would also make it the Star Market’s second-largest IPO.

As the only Chinese integrated devices manufacturer that has achieved large-scale DRAM production, CXMT’s IPO has attracted investment from several leading brokerages, including China Merchants Securities and Huaan Securities, as well as from insurers, through a mix of alternative investment subsidiaries, private equity funds, and industrial funds.

CXMT has three 12-inch DRAM wafer fabs in Hefei and Beijing, giving it the largest production capacity in China and the fourth-largest globally. The firm’s industrial chain includes multiple links, such as equipment, materials, packaging, and testing, and its suppliers include more than 30 mainland-listed firms with a total market value of over CNY3 trillion (USD444 billion).

Last year, CXMT bought CNY11.5 billion worth of raw materials, including CNY4.3 billion of chemicals, CNY1.4 billion of photoresists, CNY980 million (USD145 million) of silicon wafers, CNY590 million of electronic specialty gases, and CNY250 million of target materials.

The listing is expected to further strengthen China’s self-sufficiency in memory chips, while also driving coordinated growth across the full industrial chain, from upstream materials, equipment, and components to downstream applications.

While investor attention has been centered on memory makers and other key AI component suppliers in Korea, Japan and Taiwan, Chinese AI infrastructure stocks have quietly underperformed. 

Commenting on the latest developments, Goldman's Peter Slater writes that last week's headline that the Chinese government plans to spend upwards of $300bn on a network of interconnected data centers may bring Chinese AI names back into focus. 

Noting that just like in the US, technology independence remains a key tenet of China’s national security policy, Slater writes that not dissimilar to what we’re seeing in U.S. capital markets, China’s fast-tracked IPO pipeline will bring several high-profile AI leaders public as soon as next month: 

• CXMT: China’s leading DRAM maker, #4 globally (received CSRC approval)
• Unitree: China’s leading humanoid robotics pioneer (received CSRC approval)
• YMTC: China’s leading NAND flash maker, #4 globally (formal application expected this month)  

The Goldman trader's conclusion is that "Investors may want to consider rotating into Chinese laggards with cleaner positioning and similar end-demand growth profiles in such areas as advanced packaging and optical networking and transceivers." Those who have access, may want to consider the following baskets: GSXACMEM (GS China Memory), GSXACSEM (GS China Semis) and GSXACHRO (GS China Humanoid Robots). The latter is especially pertinent in light of our recent analysis that "Goldman's Big Call Is That AI's Next Leg Is Shift From Chips To Humanoid Robotics; Here's How To Trade It"