A Closer Look at CXMT’s IPO Plans: The Semiconductor Landscape Won’t Shift ‘Yet’

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Reuters Yonhap News

The listing of ChangXin Memory Technologies (CXMT), China’s largest DRAM manufacturer, sent shockwaves through the Korean semiconductor industry. However, based on its IPO prospectus and its current investment plans, it appears unlikely that the company will be able to overturn the memory market currently led by Samsung Electronics and SK hynix in the near term.

This is because CXMT’s investment plans are more focused on advancing the manufacturing process and improving cost competitiveness for its mainstream DRAM products—such as DDR5 and LPDDR—instead of making a direct push into the high-bandwidth memory (HBM) segment.

Nevertheless, the fact that China now has the financial ammunition to pursue Korean companies in the server, PC, and mobile DRAM markets makes the medium- to long-term threat clear.

According to an analysis of CXMT’s IPO prospectus on July 28, the total planned use of public offering funds amounts to 29.5 billion yuan (about 6.39 trillion KRW). CXMT plans to invest 7.5 billion yuan (about 1.62 trillion KRW) in upgrading its existing memory wafer production lines, 13 billion yuan (about 2.82 trillion KRW) in DRAM technology upgrades, and 9 billion yuan (about 1.95 trillion KRW) in next-generation DRAM preemptive R&D, respectively.

While the scale of investment falls short of the tens of trillions of won invested by Samsung Electronics and SK hynix, the key point is that this late-entrant Chinese firm is targeting Korea’s mainstay product lines through focused investment.

The largest portion is allocated to DRAM technology upgrades, with a total project cost of 18 billion yuan (about 3.9 trillion KRW), of which 17.4 billion yuan (about 3.77 trillion KRW) will be spent on purchasing and installing equipment. CXMT plans to upgrade its existing production lines to a next-generation process platform by the first half of 2028. Rather than constructing a host of new factories, the goal is to improve yield and cost competitiveness by enhancing the process level of existing lines.

Another 7.5 billion yuan will go into upgrading existing wafer production lines. This is viewed as an investment to expand the proportion of mid- to high-end DRAM products. If, during this process, CXMT adopts more domestically produced semiconductor equipment, materials, and parts, its investments could also accelerate the accumulation of technology across China’s entire semiconductor supply chain.

For next-generation DRAM preemptive R&D, 9 billion yuan has been allocated. The investment prospectus mentions DDR5, LPDDR5X, LPDDR6, CXL, and future DRAM technology directions such as in-memory and near-memory computing. The aim is to secure high-performance, low-power memory technologies needed in server, PC, mobile, and AI computing environments.

This demonstrates that CXMT’s production structure is shifting to target the DDR5 and LPDDR5/LPDDR5X markets, which are currently the main focus of Samsung Electronics and SK hynix. CXMT has already discontinued its own DDR4 production and is transitioning its processes to focus on DDR5.

While Samsung Electronics and SK hynix still lead in HBM and advanced DRAM, if Chinese PC, server, and smartphone manufacturers begin to replace DDR5 and LPDDR products with CXMT products, the Korean firms’ market share and pricing power for DRAM in China could be undermined. In particular, since Samsung Electronics has a higher proportion of general-purpose and mobile DRAM, it may be more directly exposed to risks as CXMT improves yields and expands its Chinese customer base.

It is also important to keep an eye on how CXMT will use the substantially increased funds raised, over and above what is outlined in its IPO prospectus. CXMT’s actual total fundraising was 57.92 billion yuan (about 12.54 trillion KRW), nearly double the 29.5 billion yuan for which specific uses were disclosed. How the company utilizes the additional approximately 28.4 billion yuan (about 6.15 trillion KRW) it raised beyond the original plan could serve as a ‘hidden card’ for catching up with Korean and U.S. memory companies.

According to the disclosed prospectus, there is no direct mention of HBM, through-silicon via (TSV), stacking/bonding, or advanced packaging production lines. However, if the additional funds are used to expand conventional DRAM production, this could lead to price pressures; if allocated to HBM, TSV, or advanced packaging, it could raise concerns about China catching up in AI memory.

The difficulty CXMT faces in overturning the global DRAM market immediately is also apparent when compared to the size of SK hynix’s fundraising. SK hynix recently secured approximately USD 26.5 billion (about 40 trillion KRW) through a U.S. American Depositary Receipt (ADR) public offering—over three times CXMT’s raised total of 57.92 billion yuan (about 12.5 trillion KRW).

Given that the market leaders—Samsung Electronics and SK hynix—are already investing tens of trillions of won in HBM, advanced DRAM, advanced packaging, and expanding domestic production bases, it is difficult to interpret CXMT’s listing as an immediate shift in the leadership of the memory market.

Kim Joungho, professor at the Department of Electrical Engineering at KAIST, said, "It will not be easy for CXMT to catch up with Samsung Electronics or SK hynix in the short term due to its current profit size and technology level. It is unfortunate that the valuation of Korean semiconductor companies is being so heavily impacted."

Meanwhile, the shock of CXMT’s listing was also evident in the stock market. By July 28, the day after its listing, CXMT’s market capitalization was in the 700 trillion won range—about 60% that of SK hynix, whose share price had sharply declined. On the same day, Samsung Electronics was overtaken by U.S.-based Micron in total market capitalization for common shares. The market thus awarded a generous valuation to a memory firm whose technical prowess still lags behind that of Korean companies.

In terms of market capitalization, CXMT also surpassed Intel, the original pioneer of DRAM commercialization, ranking 9th among global semiconductor companies.

This content was produced with the assistance of AI translation services.