CXMT to raise at least RMB29.5 billion in record STAR Market IPO

CXMT, the world's fourth-largest DRAM manufacturer, plans to raise at least RMB29.5 billion in its STAR Market IPO, a record for the Shanghai tech board, as AI-driven demand fuels explosive earnings growth.

"First-half net profit attributable to the parent company is expected to range from RMB50 billion to RMB57 billion, representing year-over-year growth of 2,244% to 2,544%," CXMT said in its IPO prospectus. Revenue for the period is projected between RMB110 billion and RMB120 billion, up 613% to 677% from a year earlier.

The company plans to publicly issue 6.688 billion shares before the over-allotment option, representing about 10% of its total share capital after the offering. Strategic investors will take 3.344 billion shares, or 50% of the offering size and about 43.48% of total shares after full exercise of the over-allotment option. IPO subscription is scheduled to open next Thursday.

The record fundraising marks a milestone for China's STAR Market, which has become a key venue for semiconductor companies seeking capital amid US export restrictions on advanced chip technology. CXMT competes with Samsung Electronics, SK Hynix and Micron Technology in the DRAM market, where AI applications have driven surging demand for high-bandwidth memory chips used in data center accelerators.

Record Profit Growth Reflects AI Memory Boom

The IPO proceeds will provide CXMT with capital to expand production capacity and advance its process technology as it seeks to narrow the gap with the three dominant players that control more than 95% of the global DRAM market. The company's revenue growth reflects the broader AI-driven memory boom that has lifted the entire sector, with industry-wide DRAM revenue more than doubling over the past year as hyperscalers ramp up AI infrastructure spending.

CXMT's first-half net profit of RMB50 billion to RMB57 billion represents a dramatic acceleration from the prior year, driven by rising prices for DRAM chips and increased demand from data center operators. The company's revenue guidance of RMB110 billion to RMB120 billion for the first half implies a quarterly run rate that would put it on track for annual revenue approaching RMB240 billion, based on the midpoint of its guidance range. The net profit margin of roughly 45% to 48% would place CXMT among the most profitable semiconductor companies globally.

Strategic Importance for China's Chip Ambitions

CXMT's listing comes as China accelerates efforts to build a self-sufficient semiconductor supply chain. The STAR Market, launched in 2019 as a Nasdaq-style board for technology and innovation enterprises, has become the primary listing venue for Chinese chip companies. The board's previous largest IPO was also from the semiconductor sector, though CXMT's offering would set a new record.

The company's valuation relative to global peers will be closely watched by investors. CXMT's IPO price range and valuation multiple have not yet been disclosed. The offering size of at least RMB29.5 billion would make it the largest STAR Market IPO to date, reflecting strong investor demand for exposure to China's semiconductor self-sufficiency theme.

A successful CXMT listing could pave the way for other large technology companies to pursue STAR Market IPOs, potentially boosting the board's profile among domestic and international investors. The company's explosive profit growth, driven by AI chip demand, positions it as a bellwether for China's semiconductor ambitions as the country seeks to reduce reliance on foreign chip suppliers. The IPO also provides a liquidity event for early investors and employees, with the lock-up period for strategic investors tied to the over-allotment structure.

This article is for informational purposes only and does not constitute investment advice.