CXMT's IPO is set to become the largest chip listing in China, valued at $85 billion.

      China's largest memory chip manufacturer is set to enter the public markets. ChangXin Memory Technologies, or CXMT, has priced its initial public offering (IPO) in Shanghai at 8.66 yuan ($1.28) per share, according to the South China Morning Post. This sale is expected to generate approximately 57.9 billion yuan, or $8.5 billion.

      This would establish it as the most significant listing by a Chinese semiconductor firm on a mainland stock exchange, surpassing the previous record held by SMIC, which raised 53.23 billion yuan in Shanghai in 2020.

      CXMT plans to sell nearly 6.7 billion shares, representing about 10% of the company. At this price, the Hefei-based company would be valued at 579 billion yuan, or around $85 billion, upon its debut on Shanghai's Star Market. A 15% overallotment could elevate the total to 66.6 billion yuan ($9.8 billion). Subscriptions will open on Thursday, although CXMT has not announced a trading date.

      A state-backed memory leader

      Established in 2016 with government support, CXMT aims to compete with Samsung, SK Hynix, and Micron. The company produces DRAM, which serves as the working memory in smartphones, PCs, and servers. Currently, it holds about 7.7% of the global DRAM market.

      The client list features well-known Chinese tech companies, including Alibaba, Tencent, and ByteDance. CXMT has benefited from the AI-driven memory shortage, which has significantly increased DRAM prices.

      The company's growth has been remarkable. In the first quarter, CXMT's revenue surged over 700% year on year to 50.8 billion yuan ($7.4 billion), and it reported a substantial profit, according to its filings.

      U.S. scrutiny is increasing

      The timing of the IPO is significant. Last month, the Pentagon added CXMT to its list of "Chinese military companies." Reuters reported that a U.S. interagency committee approved the chipmaker for inclusion on the Commerce Department's Entity List, which is a trade blacklist, although this action has not yet taken effect.

      Going public raises the stakes for CXMT. The company still depends on foreign technology for its chip production, and U.S. export controls restrict its access to advanced machinery from suppliers like ASML. An IPO now allows it to raise funds domestically while the opportunity is available.

      The amount being raised far exceeds CXMT's outlined needs, as the company indicated it would invest 29.5 billion yuan in projects in its prospectus, while the offering is expected to yield nearly twice that amount. The additional funds provide room for expanding production capacity and a buffer in case U.S. restrictions become more stringent.

      For Beijing, this IPO is a milestone in its strategy for chip self-sufficiency. For CXMT, it represents a financial reserve collected at a peak in the memory market and just before potential restrictions that could complicate future fundraising efforts.