Summary of Key Points
On July 27th, Changxin Technology, a leading domestic manufacturer of DRAM memory chips, went public, with its stock price soaring by 465% and its total market value exceeding 3.28 trillion yuan, surpassing Industrial and Commercial Bank of China (ICBC) to become the largest company in the A-share market by market value. Behind this success is the ten-year commitment of Hefei's state-owned assets: since the initiation of the "506 Plan" (a project aimed at developing domestic DRAM technology) in 2016, Hefei has invested over 100 billion yuan to support Changxin's technological breakthrough from scratch. Today, Changxin is the fourth-largest DRAM manufacturer in the world, with its market share doubling to 8% in just one year, and it has already started making profits due to the surge in demand for AI technologies. More importantly, Changxin has helped Hefei develop a complete integrated circuit (IC) industry chain, setting an example for other central Chinese cities to pursue industrial development and catch up.
I. The Dramatic Rise on the First Day of Listing: Why Did Changxin Become the New "King" of the A-share Market?
On the day of its listing, Changxin Technology's stock price soared from an issue price of approximately 8.66 yuan to 49 yuan, with a total market value of 3.28 trillion yuan, overtaking ICBC. This was no accident:
- The Urgent Need for Domestic Alternatives: DRAM is a critical component in computers and smartphones, previously monopolized by Samsung, SK Hynix, and Micron. Changxin is the only domestic company capable of mass-producing mainstream DRAM, addressing this major dependency issue and significantly raising market expectations.
- AI Demand Fuels the Growth: The demand for AI models and servers has led to a global shortage of DRAM, driving up prices. Changxin's products have emerged at the right time, with impressive performance (net profit of 24.7 billion yuan in the first quarter, expected to range from 50 to 57 billion yuan for the上半 year), attracting investors.
II. Hefei's State-Owned Assets' Ten-Year Investment: From the "506 Plan" to Over 100 Billion Yuan
Hefei's state-owned assets have played a crucial role in Changxin's success:
- The Beginning of the Journey: The cooperation between Zhu Yiming, the chairman of GigaDevice Technology, and Hefei officials began on May 6, 2016, with the launch of the 19nm DRAM project. Of the initial 18 billion yuan in funding, Hefei contributed 14.4 billion yuan (80%), while GigaDevice provided only 3.6 billion yuan.
- Continued Investment: The total investment for the project amounted to 150 billion yuan, making it the largest industrial project in Anhui at that time. Hefei's state-owned assets have been a major investor throughout the entire process, showing unwavering support over the past ten years.
- Early Vision: As early as 2013, Hefei aimed to build a "Silicon Valley in China," and Changxin was a key part of this vision for the IC industry. This was not a last-minute effort but part of a long-term strategic plan.
III. From Zero to Success: How Did Changxin Establish a Footprint in the Global Market?
Changxin's growth trajectory is well-defined:
- Breakthrough in 2019: The company began producing 12-inch wafers and launched 8GB DDR4 memory, marking the first time China had its own mainstream DRAM products (previously relying on imports).
- Doubling of Market Share: Its global market share increased from 3% in the first quarter of 2023 to 8% by the end of the year, elevating it to the fourth-largest DRAM manufacturer globally (with Samsung, SK Hynix, and Micron still leading). Although the gap remains significant, Changxin has now gained a foothold in the competitive landscape.
- Early Profitability: Thanks to the AI boom, Changxin exceeded its initial profit forecasts. What was expected to happen by 2026 actually happened in 2023, with net profits covering the losses from the previous two years, driven by increased DRAM prices and sales.
IV. Hefei's Valuable Investment: More Than Just a 1-Trillion-Yuan Market Value—A Complete Industry Chain
Hefei's state-owned assets hold approximately 33% of Changxin's shares, corresponding to a market value of 1.05 trillion yuan. However, the investment's value goes beyond mere financial gains:
- Industry Chain Development: As the leader of this chain, Changxin has attracted over 600 IC companies to Hefei, creating more than 70,000 jobs. Examples include chip designers like MediaTek and GigaDevice Technology, manufacturers like Jinghe Integration (listed on both A-share and H-share markets), equipment providers like Xingji Microelectronics, and testing and packaging companies like Peidun Technology.
- Economic Growth: Hefei's IC industry output has increased by sevenfold, from 18 billion yuan in 2016 to over 150 billion yuan in 2025. The city now has a complete industrial chain covering design, manufacturing, equipment, and testing, becoming a vital pillar of its economy.
V. The Hefei Model: A Lesson for Other Central Chinese Cities
Changxin's success offers insights for other cities:
- Breaking the Paradigm of Gradual Industrial Transfer: Unlike regions that traditionally only receive outdated industries from coastal areas, Hefei used patient capital investment to focus on high-end chip development and achieve industrial advancement.
- A Comprehensive Approach: Hefei combines technology research and development with industrial implementation and financial support. Even during tough times (such as fluctuations in the storage industry), it continues to invest to help companies overcome challenges.
- Advantages of Central Cities: Compared to first-tier cities, Hefei offers lower costs and more space, making it ideal for long-term investment in high-tech industries. Lin Fei, vice president of the Anhui Development Strategy Research Association, notes that advanced manufacturing will likely shift to central Chinese cities with strategic capabilities—Hefei is a prime example of this.
In summary, Changxin's listing is not just the success of one company but a testament to Hefei's innovative industrial investment model. It demonstrates that with patience and strategic vision, central cities can also play a significant role in high-end industries, even leading the way in China's manufacturing transformation.