Hefei State Capital's Decade-Long Strategy: CXMT's IPO Drives Memory Industry Transformation and Massive Returns

China's leading dynamic random-access memory (DRAM) manufacturer, ChangXin Memory Technologies (CXMT, 688825-CN), listed on the STAR Market on Monday (27th), setting a new record in the capital markets. On its first trading day, the closing price reached 49 yuan, a 465.82% surge from its IPO price, pushing the company's market capitalization beyond 3.2 trillion yuan—surpassing Industrial and Commercial Bank of China (ICBC) to become the most valuable A-share listed company.

The actual controllers behind CXMT's first and second largest shareholders are both the Hefei Municipal State-owned Assets Supervision and Administration Commission (SASAC), holding approximately 36.79% of shares. This stake now has a book market value exceeding 1.2 trillion yuan.

CXMT's success is closely tied to the strategy of its visionary leader, ZHU Yiming. Previously the founder of GigaDevice, ZHU recognized China's long-standing absence in the memory sector and decided in 2016 to enter the DRAM industry, pledging not to draw a salary until the company became profitable.

Technologically, CXMT avoided direct competition with Samsung, SK Hynix, and Micron—collectively dominating over 90% of the global market at the time—by legally acquiring technical documentation and patent licenses from Qimonda, a bankrupt German memory giant. In 2019, CXMT achieved China's first breakthrough in mass-producing DRAM, going from 'zero to one'.

A Decade of Losses and Hefei’s 'Counter-Cyclical' Patience

This investment has been described as a 'high-stakes gamble,' primarily due to the DRAM industry's massive capital expenditures and strong cyclicality. The 'Project 506' launched in 2016 had a total investment of approximately 150 billion yuan, with Hefei's state capital contributing 80% of the initial 18 billion yuan. CXMT faced a decade of continuous losses in its early development, accumulating losses between 36.6 billion and 40.8 billion yuan.

Despite this, Hefei's state capital demonstrated extraordinary investment patience. According to reports from 'Wall Street Insights,' during CXMT's most difficult periods—such as the 2023 memory price crash—Hefei not only refrained from withdrawing funds but actively acquired shares from exiting early investors. The key to Hefei's success lies in a 'counter-human-nature' institutional design, featuring rotating officials and a stable long-term blueprint, along with a robust fault-tolerant mechanism. As long as procedures are compliant, decision-makers face no personal liability even if a project ultimately fails.

CXMT's financial turning point came in 2025. Surging memory demand driven by artificial intelligence (AI) computing power, combined with CXMT's successful product transition from DDR4 to DDR5, increased its capacity utilization from 85% to 95%. In Q1 2026, CXMT reported 50.8 billion yuan in revenue and 24.762 billion yuan in net profit attributable to shareholders—equivalent to earning about 400 million yuan per day. In just one quarter, the company nearly offset a decade of accumulated losses.

The Industrial Ripple Effect of the 'Hefei Model'

The significance of CXMT's IPO extends beyond financial returns—it has catalyzed the development of a full integrated circuit (IC) industrial chain in Hefei. By the end of 2025, over 450 related enterprises had clustered in the city, with industrial output growing from 18 billion yuan in 2016 to 151.4 billion yuan.

The Song Xuetao research team points out that CXMT's listing symbolizes a shift in China's urban competition logic: from traditional 'land finance' to 'equity finance.' By using state capital as early-stage guiding investment, Hefei has built a sustainable system for nurturing high-tech enterprises. Through companies like CXMT (memory), BOE (displays), and NIO (electric vehicles), Hefei has formed a deep industrial synergy ecosystem known as 'Chip-Screen-EV-Integration.'