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China’s CXMT Corp Begins IPO Preparation Amid Push to Expand DRAM Chip Business

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CXMT Corporation, the parent company of Chinese DRAM chipmaker ChangXin Memory Technologies, has started the initial preparations for an initial public offering (IPO), according to a document released by China’s securities regulator.

Summary:

  • IPO Preparation:
    CXMT has entered the “counselling process” for an IPO, having hired state-owned investment banks China International Capital Corporation and CSC Financial to assist. However, details on the timing or location of the IPO remain undisclosed.

  • Company Profile:
    CXMT is a major player in China’s drive to develop a domestic dynamic random-access memory (DRAM) chip industry, a sector historically dominated by firms from the U.S., Japan, and South Korea. Founded in 2016 with state backing, CXMT oversees subsidiaries including ChangXin Memory Technologies.

  • Production Facilities:
    The company operates two semiconductor foundries in China—one in Hefei, Anhui Province, and a newer facility in Beijing, with production ramping up since September 2023. Monthly production capacity is estimated at around 200,000 12-inch wafers.

  • Regulatory Challenges:
    CXMT narrowly avoided being added to the U.S. Entity List in May but remains subject to U.S. export restrictions from October 2022, which limit China’s ability to manufacture advanced DRAM chips.

  • No Further Details:
    The document did not specify which assets will be part of the IPO or whether the CXMT subsidiary itself will be listed. The company did not immediately respond to requests for comment.

Shares of Key Chip Suppliers Jump as U.S. Considers Milder China Sanctions

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Shares of global semiconductor equipment suppliers surged on Thursday following reports that the U.S. is revising its proposed sanctions on China’s chip industry, potentially implementing less restrictive measures than previously planned.

ASML, a Dutch semiconductor equipment manufacturer, saw its shares rise by approximately 4.3% in early trading in Europe. Similarly, Japan’s Tokyo Electron saw a more than 6% increase in its share price.

According to a Bloomberg report, the U.S. government is contemplating new restrictions on the sale of semiconductor equipment and AI memory chips to China, but these measures are expected to be less severe than earlier proposals.

The U.S. Commerce Department’s Bureau of Industry and Security did not provide an immediate comment regarding the Bloomberg article.

One significant shift in the proposed measures is the decision not to add certain Chinese companies to the U.S. export blacklist, known as the Entity List. Among the companies not affected is ChangXin Memory Technologies, a Chinese memory manufacturer that competes with major global players like SK Hynix and Samsung.

For ASML, analysts at Jefferies noted that the company had previously forecast a 30% revenue decline from China next year due to restrictions. However, the exclusion of ChangXin from the export blacklist could result in a smaller-than-expected decline in ASML’s Chinese sales for 2024.