China’s Changxin Memory appoints CICC, China Securities for local IPO

Chinese chip maker Changxin Memory Technologies Inc (CXMT) has appointed investment banks CICC and China Securities as sponsors for its planned domestic initial public offering (IPO), two people with knowledge of the matter said.

CXMT, owned by state-backed parent Innotron Memory Co, is China’s leading maker of DRAM memory chips. Bloomberg reported in April that CXMT’s IPO would target a valuation of more than $14.5 billion.

The sources said a handful of other local investment banks are expected to take more junior roles in the deal, and bookrunners for the offering had still to be finalized.

Earlier this week a U.S. lawmaker asked the U.S. Commerce Department to put trade curbs on CXMT after Beijing banned the sale of some chips made by U.S.-based Micron Technology Inc.

Analysts believe CXMT’s chips are two to three generations behind industry leaders Micron, Samsung and SK Hynix, but the company is the domestic competitor most likely to benefit if Micron is barred from China’s massive chip market.

The proposed IPO comes amid mounting diplomatic and trade tensions between China and the United States.

Washington has sought to curb exports of chip-making equipment to China, requiring licenses for U.S. companies to export advanced chips and chip-making equipment in a bid to slow China’s technological advances.

CXMT has one fab in operation and is building two others. According to research firm Trendforce, equipment export restrictions imposed by the United States since October might affect its expansion plans.

CXMT will join a growing list of Chinese chipmakers looking to sell shares publicly on the mainland.

Chinese chipmaker Hua Hong Semiconductor Ltd said last week that it had received Shanghai Stock Exchange approval for its planned $2.6 billion share listing, which is expected to be one of the country’s biggest this year.

CXMT’s listing plan appears to be in early stages as it has yet to submit application to the country’s securities regulator for the so-called pre-IPO tutoring with banks, a search on China Securities Regulatory Commission website showed.

In a domestic listing, companies will formally file for a float after advisers have instructed them on the IPO process.

CXMT’s listing, if materialises, will add to a busy year for IPOs in China, as companies revive their plans after the world’s second-largest economy reopened after three years of COVID-induced lockdown. Reuters