Earning nearly 400 million daily, from a loss of 36.6 billion to the world's fourth-largest, Changxin Technology's IPO resumes

On May 17, Changxin Technology updated its IPO prospectus for the Sci-Tech Innovation Board and resumed the listing review.

The most striking figure in the prospectus is net profit of 33.012 billion yuan in the first quarter of 2026, which translates to roughly 4 billion yuan earned per day.

Net profit attributable to the parent in a single quarter is already about 13 times the net profit attributable to the parent for the entire year of 2025 (1.875 billion yuan).

The common market space yielded by the three giants

DRAM is the most mainstream category of memory chips and the area where price increases in this cycle have been the most intense. According to TrendForce data, the contract price of DRAM in the first quarter of 2026 has been revised upward to a quarter-over-quarter gain of 93% to 98%. What is driving this round of price surge is high-bandwidth memory, HBM.

The rapid expansion of AI infrastructure boosts demand for DRAM so that a standard AI server requires 8 to 10 times the DRAM of an ordinary server. Specifically for high-end storage like HBM, which is designed for AI accelerator cards, demand growth is even further above that of general-purpose DRAM.

Samsung, SK Hynix, and Micron—the three major players in the global DRAM market—have shifted a large amount of advanced-node production capacity away from general-purpose DRAM to HBM. HBM is essentially DRAM stacked together, but with more advanced process technology and higher gross margins. SK Hynix’s operating profit margin reaches as high as 72%.

The direct cost of this capacity switch is that general-purpose DRAM such as DDR4 and DDR5 faces a severe supply gap.

The Price Monitoring Center of the National Development and Reform Commission issued a notice in February this year confirming that from September 2025 to February 2026, the shortage in the global memory market continued to widen. In January this year, DRAM prices hit the highest record since 2016.

The key point is that the conversion cycle for HBM production lines is long. The three giants had already basically locked in their advanced-node capacity for HBM in 2025, and HBM capacity is expected to be sold out ahead of time in 2026, making it impossible to reverse in the short term. The market expects that in the second quarter, DRAM contract prices will still rise quarter-over-quarter by 58% to 60%.

Changxin Technology’s core products are general-purpose DRAM, and it has no HBM business. This round of profit surge comes from the common market space that the three giants have voluntarily ceded in pursuit of HBM’s high margins.

Fourth in the world by scale of capacity

In this round of price surge, Changxin Technology’s strong performance is achieved thanks to the following key foundational conditions: capacity utilization near full load, product coverage of mainstream specifications, and customers largely consisting of top domestic cloud providers.

Currently, the company has a total of 3 12-inch DRAM wafer fabs in Hefei and Beijing. Its capacity scale ranks fourth globally and first in China. The prospectus shows that capacity utilization increased from 87.06% in 2023 to 95.73% in 2025, approaching full production.

In 2025’s principal revenue, the DDR series accounted for 31.87%, with DDR5 as the main growth driver, while the LPDDR series accounted for 66.43%, mainly LPDDR5/5X.

Gross margin for the DDR series in 2025 was 41.89%, and for the LPDDR series 37.25%, for an overall operating gross margin of 41.02%. Compared with the DDR series’ gross margin of negative 108.76% in 2023, the magnitude of the price increase is clearly evident.

From 2023 to 2025, the company’s operating revenue was 9.087 billion yuan, 24.178 billion yuan, and 61.799 billion yuan respectively, with a compound growth rate of 160.78%. Performance guidance for the first half of 2026 is revenue of 110 billion to 120 billion yuan, and net profit attributable to the parent of 50 billion to 57 billion yuan.

Market share is calculated based on DRAM sales in Q4 2025. Changxin’s global market share is 7.67%. The three giants together account for more than 90% of the global share: Samsung 36.6%, SK Hynix 32.9%, and Micron 22.9%.

In Q1 2026, net profit attributable to the parent was 24.762 billion yuan. Among major global memory manufacturers, it ranked just behind Samsung (about 215 billion yuan), SK Hynix (about 1837 billion yuan), and Micron (about 939 billion yuan).

Price-driven profit elasticity

This round of profit surge mainly comes from industry pricing, not from fundamental improvements in cost structure.

DRAM is a typical heavy-asset cyclical industry with extremely high fixed costs, with equipment depreciation being the core. The prospectus shows that in 2025, depreciation and amortization totaled 24.68 billion yuan, which is 2.3 times the 2023 figure.

Capital expenditures from 2023 to 2025 were 43.7 billion yuan, 71.2 billion yuan, and 49.7 billion yuan respectively. By the end of 2025, accumulated losses reached 36.65 billion yuan, mainly due to high depreciation during the early large-scale construction phase.

A characteristic of heavy-asset cyclical industries is that when prices are high, after covering fixed costs, almost all incremental profits are converted into net profits, with very high leverage. When prices fall, profits disappear at the same rate because fixed costs do not decrease as prices do.

In every historical capacity oversupply cycle driven by the three giants, the entire industry is pushed into massive losses. Changxin Technology’s loss period from 2022 to 2024 is a direct reflection of the previous downturn cycle.

Industry insiders predict that this current boom cycle could continue until mid-2027. The basis is that the structural suppression of general-purpose DRAM by HBM conversion is still ongoing, and the three giants remain highly restrained in expanding capacity for general-purpose DRAM.

However, after 2027, if demand from AI servers slows, or if the three giants adjust their capacity strategies, supply-demand balance could be disrupted again at any time.

Capacity expansion and technological “positioning” within the cycle window

The timing of restarting this IPO has a clear logic: the boom cycle is still ongoing, the company has ample cash flow, and the valuation window in the capital market is open.

It plans to raise 29.5 billion yuan, which would be the second-largest financing scale in the history of the Sci-Tech Innovation Board. The proceeds will be used for 75 billion yuan to upgrade and transform memory wafer manufacturing mass production lines, 130 billion yuan for DRAM memory technology upgrades, and 90 billion yuan for forward-looking technology R&D. The core focus is to expand capacity, advance process nodes, and promote HBM R&D.

The current mass production process is the 16nm node. In the absence of EUV lithography machines, process catch-up is one of the core constraints, and there is still a gap versus Samsung and Hynix, which are at below 12nm.

The ramp-up of DDR5 is the result of process iteration. By Q2 2026, Changxin’s global market share for DDR5 has risen to 3.97%. HBM is also the product line with the largest gap versus international leaders, and it is the highest-margin category. Samsung and Hynix have already moved to mass production, and Micron is following.

Changxin’s current mass production is concentrated in DDR4, DDR5, and the LPDDR series. HBM3 samples have been delivered to domestic customers such as Huawei, but the mass production plan is for the Shanghai packaging plant to start production by the end of 2026—about 2 to 3 generations behind the industry’s front line.

TrendForce predicts that by 2027, HBM’s share of total global DRAM revenue will rise from about 12% in 2024 to over 35%. If a manufacturer cannot produce HBM, its share in high-growth markets will be compressed.

This also explains why 90 billion yuan in fundraising is specifically earmarked for forward-looking technology R&D: during the boom cycle, converting capital market financing into technology upgrade investments is one of the core reasons this IPO was restarted at this time.

From cycle beneficiary to global competitor

The industry is still in the boom cycle. Changxin’s full capacity utilization combined with high prices will keep profitability going. Once the funded capacity is implemented, this period will also be the window where downside cyclical risks are most concentrated.

Omdia predicts that by 2030, the global DRAM market size will reach 571 billion USD, with a CAGR of 30.56%. The overall market will still be expanding, and competition will intensify in parallel.

General-purpose DRAM is a mature market, while HBM and high-end storage for AI data centers are truly high value-added areas. Whether Changxin can achieve large-scale mass production of HBM3/3E before 2028 is a key variable determining the company’s long-term competitive position.

The global DRAM market has been monopolized by three foreign companies for more than thirty years. This stable pattern is not due to technological issues, but because DRAM has extremely high requirements for capital scale, process know-how accumulation, and supply-chain depth.

Since the company’s Hefei operations began in 2016, Hefei State-owned assets—indirectly through entities such as Hefei Urban Construction—have held shares, making Hefei an example of industrial capital that the company has continuously been involved in since its founding. Even today, achieving the transition to rank fourth globally and have quarterly net profits within the global top four is not easy.

Short-term high profitability comes from the cycle, but the capacity and technological capabilities that support cycle profits are the result of sustained investment over the past decade.

For China’s memory industry, entering the global competitive system is only the first step; continuing to break through in the high-end storage space is what ultimately determines how far the industry can go in the future.

This IPO is not only a fundraising event, but also an important milestone for Changxin Technology as it moves into the next stage of competition.