Yangtze Memory Technologies Files for IPO on the Sci-Tech Innovation Board with a 33 Billion RMB Raise

Changjiang Memory Technologies Co., Ltd.'s application for an IPO on the STAR Market has been accepted, with plans to raise RMB 33 billion. In the first quarter of 2026, the company achieved revenue of RMB 47.042 billion and a net profit attributable to shareholders of RMB 33.379 billion, averaging approximately RMB 370 million in net profit per day. Leveraging its proprietary Xtacking technology, the company ranks third globally and first in China in both shipment volume and sales revenue for NAND Flash, with 5,611 authorized invention patents. Driven by surging AI-related storage demand, the average unit price of its products rose 172.72% year-over-year, capacity utilization reached 98.02%, and the quarterly net profit margin stood at approximately 70.96%. However, this high profitability stems from a temporary convergence of AI-driven demand and overseas foundry capacity shifts; the cyclical nature of the memory industry implies significant earnings volatility risk. Under its capital-intensive model, depreciation and amortization expenses during the reporting period totaled approximately RMB 50.949 billion. The company still carries accumulated unremedied losses of RMB 3.404 billion and has no controlling shareholder or actual controller, reflecting a diversified governance structure with balanced checks and balances.

Article author and source: Caixin Magazine

On August 21, the Shanghai Stock Exchange accepted the application from Yangtze Memory Technologies Holding Co., Ltd. (hereinafter referred to as "YMTC Holding") for an initial public offering (IPO) on the STAR Market, and simultaneously disclosed the preliminary prospectus (draft for submission). CITIC Securities and CITIC Construction Securities were appointed as joint sponsors. Yangtze Memory Technologies, a well-known manufacturer of 3D NAND flash memory, is a wholly owned subsidiary of YMTC Holding, which is the applicant for this IPO.

This offering consists entirely of new shares, with no secondary share sales. The company intends to raise RMB 33 billion, with the net proceeds allocated to upgrading production lines and developing next-generation storage technologies.

As per the process, this IPO still requires review by the Shanghai Stock Exchange and registration with the China Securities Regulatory Commission; the filing draft does not have legal effect for stock issuance.

The market often refers to Yangtze Memory Technologies and CXMT (CXMT Group Co., Ltd., 688825.SH), which is listed on the STAR Market, as the "two giants" of domestic memory storage. However, their business areas do not overlap. Yangtze Memory specializes in 3D NAND flash memory, used for persistent, high-capacity storage in devices such as solid-state drives and smartphones; while CXMT’s wholly owned subsidiary, CXMT Memory Technology Co., Ltd., focuses on DRAM memory—the volatile working memory that loses data when power is turned off. The two respectively correspond to the "warehouse" and "workbench" within the computing architecture.

Both memory chip companies adopt the IDM (integrated device manufacturer) model, integrating chip design, manufacturing, and packaging/testing, but they follow independent technological pathways and operate in separate global competitive landscapes.

The most striking data in this prospectus is that the company achieved revenue of RMB 47.042 billion and a net profit attributable to parent shareholders of RMB 33.379 billion in the first quarter of 2026. This means that, in the first quarter of 2026, Changcun Holding earned an average of approximately RMB 370 million in net profit per day.

This set of data is the result of multiple synergistic factors: technological accumulation, production ramp-up, and an AI-driven upward cycle in storage. The inherent pressures of heavy asset depreciation, strong cyclical mean reversion, and external supply chain constraints in the memory chip industry have not diminished despite higher profits.

This prospectus also fully presents the company’s position in the industry, operating leverage, industry drivers, capital and cyclical risks, and corporate governance—four key areas warranting close attention.

The prospectus cites data from TrendForce, indicating that in the first quarter of 2026, YMTC's NAND Flash business ranked third globally and first in China by both shipment volume and sales revenue.

However, this market ranking should be viewed objectively. Samsung Electronics and SK Hynitz have long consistently ranked as the top two globally, with significant market share advantages; the third tier, besides YMTC, includes Micron Technology, Kioxia, and Western Digital (formerly SanDisk), with relatively small differences in market share, meaning company rankings may still fluctuate in future quarters.

Technically, the proprietary Xtacking architecture forms the core competitive advantage of Longsys. In 2022, the company launched Xtacking 3.0 technology, earning the "Most Innovative Storage Technology Award" at FMS, the premier global storage industry conference. Longsys became one of the first companies worldwide to introduce 3D NAND Flash products with over 200 layers, marking the first time China’s storage technology has led the world in advanced development.

In 2024, Changcun Holdings upgraded to Xtacking 4.0 technology, and the following year won the prestigious FMS award again, reshaping the global roadmap for 3D NAND technology development.

As of March 31, 2026, the company held 5,611 authorized invention patents and is one of the few integrated circuit companies in mainland China to have established patent cross-licensing agreements with leading international manufacturers.

In terms of products, ChangXin Memory Technologies' NAND Flash products are categorized into three types based on form factor: memory chips, smart terminal products, and SSDs (solid-state drives), primarily used in applications such as data centers, enterprise servers, and consumer electronics. Additionally, its subsidiary, Amkor Micro, provides chip packaging and testing solutions as well as memory packaging and testing services.

The prospectus also highlights current weaknesses of Changcun Holding: during the reporting periods, although the company did not have any single customer accounting for more than 50% of its revenue, the combined sales to the top five customers represented a relatively high proportion of revenue, at 55.73%, 64.62%, 51.65%, and 54.34% for each respective period. Although the company has already entered the supply chains of some leading international clients, its enterprise-grade, high-value-added products still lag behind those of overseas giants. Geopolitical and other external factors pose practical constraints on acquiring overseas customers and expanding into international markets, making overseas market development a medium- to long-term challenge.

In other words, Changcun Holding’s core revenue is heavily concentrated among domestic top-tier clients, while it lacks the product strength and brand premium needed to directly compete with giants like Samsung and Micron in the more profitable overseas enterprise market; geopolitical factors further make it difficult to close this gap through commercial means in the short term.

Unlike previous moderate cycles driven by smartphone or PC shipments, this storage chip supercycle is powered by AI.

Demand for storage products is experiencing structural surge. According to the prospectus, citing forecasts from International Data Corporation (IDC), the global volume of newly generated data annually is expected to skyrocket from 175 ZB in 2025 to 1,003 ZB by 2030; a Goldman Sachs research report also indicates that, as AI agents enter commercial deployment in 2026, global monthly token consumption will rise to 24 times current levels by 2030.

Growing demand for computing power continues to drive leading companies to increase their investments. According to a 2026 report by TrendForce, U.S. four major internet companies’ capital expenditures are projected to rise from $228.3 billion in 2024 to $1.45 trillion in 2030, with capital expenditure as a percentage of revenue increasing from 16.1% to 44.7%. China’s four major internet companies’ capital expenditures are expected to increase from $33 billion in 2024 to $221.8 billion, with capital expenditure as a percentage of revenue rising from 8.4% to 20.2%.

As the mainstream choice for cloud-side AI and intelligent computing storage, enterprise-grade SSDs are experiencing the strongest demand. TrendForce, a research firm, predicts that global enterprise-grade NAND Flash demand will exceed 1.325 million PB by 2030, with a compound annual growth rate of 36.1% from 2025 to 2030, making it the fastest-growing application segment in the semiconductor memory market.

In the consumer products segment, although global shipments of smartphones and personal computers have declined, demand for NAND Flash in smart terminals such as smartphones and tablets, as well as for consumer-grade SSDs in personal computers, is expected to rebound after a slight decline in 2026, driven by ongoing advancements in edge AI.

On the supply side, a structural contraction occurred. During the industry-wide loss cycle from 2022 to 2023, Samsung Electronics, SK Hynix, and Micron Technology significantly reduced capital expenditures on traditional NAND, redirecting capacity and funding toward high-value-added HBM (High Bandwidth Memory) and advanced DRAM. Since building and expanding wafer fabs takes two to three years, a structural capacity shortfall emerged across the industry over several quarters when AI storage demand surged.

The financial data for Changcun Holding's reporting period vividly illustrates the industry's underlying characteristic of sharp profit-loss swings. Memory chip manufacturing is a typical capital-intensive business, where large-scale depreciation and amortization from factories and equipment constitute rigid fixed costs unaffected by product price fluctuations. This creates strong earnings leverage: during upcycles, higher capacity utilization and rising prices dilute depreciation, significantly expanding profits; during downturns, even as revenues contract, depreciation continues to be fully recognized, amplifying losses.

^{(Main financial data and financial indicators of Changcun Holding, in ten thousand yuan) Source: Company Prospectus}

In 2023, the industry was at the bottom of its cycle, with Yangtze Memory Technologies' consolidated gross profit margin reaching only 5.45%, rendering its NAND Flash business nearly unprofitable and resulting in a full-year net loss of RMB 19.181 billion. With the surge in AI demand driving supply and demand into a tight balance, product prices experienced a strong rebound.

According to the prospectus data, the company’s NAND Flash product capacity utilization rate reached 98.02% in the first quarter of 2026, with production lines operating at nearly full capacity; the average unit price of NAND Flash products increased by 172.72% compared to the full-year 2025 level, with the unit price of memory chips rising by 218.00%. Based on the first-quarter net profit attributable to shareholders and revenue disclosed in the prospectus, the net profit margin for the period was approximately 70.96%.

The prospectus warns that the current high net profit margin, driven by strong market conditions, cannot be simply extrapolated linearly; if overseas manufacturers significantly expand production, leading to oversupply, the company may still face substantial earnings volatility and a return to losses—even if revenue does not decline noticeably. This high earnings volatility is a common industry characteristic shared by all IDM memory manufacturers globally, including Samsung and SK Hynix.

Regarding the future supply and demand of NAND Flash, TrendForce believes that as production capacity comes online gradually in 2027, if end-market consumer demand continues to weaken, NAND Flash supply will become more relaxed in the second half of 2027. However, TrendForce added that if there is a breakthrough in the adoption of AI agents, it could once again drive growth in high-speed SSDs.

In other words, Changcun Holding’s $33.3 billion in profits essentially resulted from a precise alignment between the surge in AI demand and the shift of overseas manufacturing capacity—but this alignment is not the norm; once supply-side production bottlenecks are resolved, pricing power in memory chips will revert to the cycle.

The market generally regards geopolitical factors and supply chain issues as major risks facing semiconductor companies, but according to the official ranking in the prospectus under “Special Risk Factors,” the risks of continued high investment and price and gross margin volatility rank first and second, with geopolitical friction ranking third. Capital investment and cyclical price declines remain the primary survival risks for storage IDM companies.

The memory chip industry requires continuous high levels of investment, with rapid iteration of products, technologies, and processes; companies must anticipate industry trends and commit substantial funding to forward-looking R&D. During the reporting period, the company incurred cumulative R&D expenses of approximately RMB 15.953 billion; economies of scale are critical to cost reduction, with cumulative cash outflows for the acquisition of long-term assets totaling approximately RMB 96.39 billion during the period.

Compared to international storage giants, ChangXin Memory Technologies still has a capacity gap and will need to continue making substantial investments in production line construction and upgrades. After commissioning, these investments will result in significant depreciation and amortization expenses. During the reporting period, total depreciation and amortization amounted to approximately RMB 50.949 billion, representing a key component of the cost of sales and operating expenses.

Yangtze Memory Technologies will still face multiple operational risks: insufficient funding could make it difficult to sustain high levels of capital expenditure; if new products lack competitiveness, R&D directions are misjudged, or process iterations lag behind, the company risks losing market share; should there be significant adverse changes in technology or market demand, the substantial prior investments in technology and capacity may fail to deliver expected commercial returns, directly impacting operating performance.

Another major risk comes from the "cycle." The memory chip industry exhibits significant cyclicality due to supply and demand dynamics. Although the global NAND Flash market is currently in a high-demand, supply-constrained phase, driving rapid growth in the company’s gross margin and net profit, the duration of this high-demand period remains uncertain. If demand growth slows or major memory manufacturers rapidly expand capacity and reallocate production, leading to a substantial increase in supply, product prices could decline.

In addition to internal operational pressures from capital and cyclical factors, the third major risk stems from geopolitical impacts on the supply chain. The manufacture of memory chips requires high-grade raw materials, equipment, and spare parts, and the global semiconductor industry has developed a highly specialized and collaborative division of labor. In recent years, instability in international trade policies has increased; if significant adverse changes occur, they could negatively affect the procurement of critical equipment and spare parts, the stability of production and operations, and the expansion into overseas markets.

Meanwhile, the company’s core wafer manufacturing capacity is almost entirely concentrated at the Wuhan Donghu High-Tech Base. This high degree of geographic concentration exposes it to single-point risks of production line disruptions and equipment damage in the event of regional power failures, water supply issues, or public emergencies.

Intellectual property disputes are a common form of competition in the global semiconductor industry. As of June 30, 2026, the major pending patent litigation cases involving the issuer and its controlled subsidiaries are those concerning Yangtze Memory Technologies, YMTC America, and Micron Technology and its affiliated companies. According to the legal opinion issued by Jintiancheng on "Special Legal Opinion on Intellectual Property Litigation Involving Yangtze Memory Technologies Holding Co., Ltd.," the issuer faces a low risk of losing these cases, and they are not expected to have a material adverse effect on the issuer’s core product technologies or ongoing operational capabilities.

The ranking of risks in the prospectus sends a signal: for capital-intensive IDM companies like Changcun, whether funds can be continuously invested and whether the invested assets can be sold at a good price poses a far more immediate threat than abstract geopolitical risks.

The prospectus demonstrates Changcun Holdings' diversified and balanced equity and governance structure.

The company does not have a controlling shareholder or actual controller. The two largest shareholders, Hubei Changsheng (holding 26.54%) and Xinfly Technology (holding 25.35%), hold similar stakes, neither exceeding 30%. Other significant shareholders include China Integrated Circuit Industry Investment Fund Phase I (holding 11.97%), China Integrated Circuit Industry Investment Fund Phase II (holding 11.38%), Guanggu Industrial Investment (holding 9.25%), and Guoxin Fund (holding 5.90%). The prospectus discloses that the company’s key operational and business decisions are made through mutual consultation among all parties; the issuer has no foreign shareholders with direct equity ownership. Under this diversified governance structure, significant disagreements among major shareholders in the future could potentially pose challenges to decision-making efficiency.

In July 2026, the company amended its articles of association to establish governance arrangements in accordance with the Company Law: the supervisory board was abolished, and its oversight functions were fully transferred to the Board’s Audit Committee, chaired by Professor Wang Yonghai, an accounting expert and independent director. The board consists of 15 members, including five independent directors with expertise in integrated circuit microelectronics, economics, and taxation. The key employee stock ownership plan is implemented through 30 platforms in the Zhixin series, targeting core management and technical personnel, with an aggregate diluted ownership stake of 1.2949% and a 36-month lock-up period. The scale is relatively small and does not alter the company’s structure of having no actual controller. The employee share purchase price was determined in accordance with state-owned asset valuation and filing procedures, designed to align the interests of key talent.

From a financial perspective, due to the profit surge in the first quarter of 2026, the accumulated accumulated deficit on a consolidated basis has been reduced to RMB 3.404 billion. Pursuant to the resolution of the shareholders' meeting, the retained earnings accumulated prior to this issuance and listing will be shared jointly by existing and new shareholders after the issuance and listing, and the accumulated accumulated deficit prior to this issuance and listing will be borne proportionally by existing and new shareholders.

In accordance with relevant provisions of the Company Law and resolutions of the company’s shareholders’ meeting, the company must first make up for prior-year losses before distributing profits; until such accumulated unremedied losses are fully covered, cash dividends by the company face practical obstacles.

From a governance perspective, Changcun is a "co-governed" company—state capital, industry funds, and management each hold seats but none have veto power; from the standpoint of shareholder returns, it is also a company that "currently does not pay dividends"—before its accumulated unremedied losses of RMB 3.404 billion are fully offset, it lacks the practical ability to distribute cash dividends, leaving investors to rely solely on potential stock price appreciation rather than tangible dividend income.

Multi-party checks and balances mitigate the risk of "one person having the final say," but they also introduce efficiency concerns of "everyone having a say."

Storage capacity has been established as a foundational pillar of the digital economy and the AI era. Changcun Holding's pursuit of a listing on the STAR Market marks a critical milestone for China's domestic 3D NAND industry, transitioning from technological breakthrough to public capital markets.

However, the memory chip industry has always been a capital-intensive marathon with no finish line; upon enjoying the benefits of a super cycle, how to continuously absorb billions in depreciation, drive technological innovation, and strengthen supply chain resilience will be the core challenge facing Changcun as it faces scrutiny from capital markets after its listing.