[DigitalToday reporter Jinju Hong (홍진주)] CCSH, the parent of Chinese NAND flash leader YMTC, is seeking a listing on the Shanghai stock market, drawing attention to whether it could rewrite China’s memory semiconductor IPO record.

The South China Morning Post reported on Aug. 24 that CCSH plans to offer 1.98 billion to 2.43 billion shares, equivalent to 10 to 12 percent of its capital after a capital increase. It also set an overallotment option of up to 15 percent.

The final offer price and total proceeds have not been set. CCSH said in its prospectus it would allocate 33 billion yuan to investment projects. It plans to spend 20.8 billion yuan on upgrades to mass-production lines and 12.2 billion yuan on research and development.

The 33 billion yuan base investment plan alone exceeds the 29.5 billion yuan previously presented by Chinese DRAM maker ChangXin Memory Technologies (CXMT). CXMT raised 66.6 billion yuan in its July listing, setting the largest IPO record in the history of the Shanghai STAR Market. YMTC is also being discussed as a candidate for a large-scale blockbuster if investment demand surges.

The share performance of CXMT after its earlier listing showed investor enthusiasm for Chinese memory semiconductors. CXMT shares surged 466 percent on their first trading day on July 27 and closed at 49 yuan. They rose to 61.80 yuan on Aug. 17. Its market value swelled to 4.13 trillion yuan, and it also rose to No. 1 by market capitalisation in China’s stock market, overtaking Tencent Holdings in 16 trading sessions after listing.

CCSH’s results are also a factor raising expectations of a strong offering. CCSH’s first-quarter revenue this year was 47 billion yuan, close to last year’s full-year revenue of 63.2 billion yuan. Net profit attributable to controlling shareholders was 33.4 billion yuan, more than double last year’s full-year net profit of 14.2 billion yuan.

The improvement was influenced by a global shortage of NAND flash supply. YMTC’s first-quarter NAND revenue rose 393 percent from a year earlier. As selling prices rose and unit production costs fell, gross margin jumped to 78.7 percent from 36.7 percent last year. CCSH’s plan to put a significant portion of the offering proceeds into production-line upgrades is also seen as an effort to link this profitability to expanded production capacity.

YMTC’s global position is also expanding. Counterpoint Research said YMTC ranked third in the world in NAND bit shipments in the second quarter this year, overtaking Japan’s Kioxia. Its market share was 14 percent. It remained fifth by total revenue, as its business mix has a higher share of consumer memory than higher value-added products for data centres.

If CCSH lists, mainland Chinese investors will be able to invest directly in two pillars of China’s memory semiconductors through CXMT and YMTC. With global memory demand and prices showing strength, attention is focused on how much the IPO can accelerate capacity expansion and R&D in China’s memory industry.