A milestone moment has arrived for China's capital markets. ChangXin Memory Technologies (CXMT) officially debuted on the STAR Market today, with its shares surging over 450% at the open to reach a market capitalization exceeding 3 trillion yuan, making it the first hard-tech new stock in A-share history to open with a trillion-yuan valuation. The IPO price was set at 8.66 yuan per share.

This event signals a profound shift in China's market structure, moving away from a landscape dominated by banking and traditional consumer giants toward one where hardcore technology companies take center stage. It also represents a historic moment for the country's semiconductor industry, as CXMT has grown into China's largest and the world's fourth-largest DRAM manufacturer after a decade of challenging development.

The journey began in 2016 when Zhu Yiming, then leading GigaDevice, traveled to Hefei to establish CXMT, targeting the DRAM memory chip sector, which was nearly non-existent in China at the time. The story is also one of bold investment, with CEB Stone Capital making a decisive 1.2 billion yuan bet in 2021 when most institutions were hesitant. Zhang Wei, Chairman of CEB Stone Capital, remarked on the rare entrepreneurial spirit and vision he saw in Zhu Yiming, a key factor in their conviction.

Betting Against the Grain with a 1.2 Billion Yuan Lead Investment

The partnership between CEB Stone Capital and CXMT has deep roots in Anhui province. In 2015, CEB Stone Capital won a bid to manage a 10 billion yuan industrial upgrade fund for the province and set up a team in Hefei. When Zhu Yiming arrived in 2016 to launch CXMT with a total investment of 150 billion yuan for a DRAM base—the largest single industrial project in Anhui at the time—the two sides found a perfect match.

Zhu Yiming, a 1972 graduate of Tsinghua University, had already built a successful company, GigaDevice, which went public in 2016. Driven by a mission to break the monopoly of Samsung, SK Hynix, and Micron in the DRAM market, he resigned as GigaDevice's general manager in 2018 to become CXMT's CEO, relocating his family to Hefei. He famously pledged to forgo his salary and bonuses until CXMT became profitable.

When CXMT sought new funding in 2021, the company was still loss-making and its technology path was uncertain. Yang Shengjun, a partner at CEB Stone Capital, recalled that most institutions were pessimistic and few were willing to commit. However, CEB Stone Capital, leveraging its deep expertise in the semiconductor supply chain and experience in major deals, was chosen as the exclusive lead investor and given full access for due diligence. In September of that year, they invested 1.2 billion yuan in a single minority stake, the largest in their history. Zhang Wei noted that the investment decision was unanimous. According to the prospectus, CEB Stone Capital is expected to hold about 0.81% of CXMT's shares after the IPO.

The Core Rationale Behind the Heavy Bet

CEB Stone Capital has been heavily investing in semiconductors since 2017, recognizing critical technology gaps that gained new strategic importance after 2018. At its 2019 annual conference, Zhang Wei argued that trade frictions were not merely economic disputes but the beginning of a long-term technological and industrial standoff, necessitating the development of local capabilities in areas where the US leads.

The firm's strategy is to focus on core supply chain companies. CXMT fit this profile perfectly. Zhang Wei quoted a 2017 report from the US President's Council of Advisors on Science and Technology to underscore that semiconductors and memory chips are more critical national strategic resources than oil. In this context, the value of an investment like CXMT transcends traditional financial models, which is why CEB Stone Capital was willing to invest 1.2 billion yuan at a valuation that deterred others.

The bet has paid off spectacularly. In the first quarter of this year, CXMT reported revenue of 50.8 billion yuan, a 719% year-on-year surge, and a net profit of 33 billion yuan, a 1268% increase. This means the company's quarterly profit alone surpassed the combined earnings of the entire STAR Market. Zhang Wei stated that even without the AI-driven super-cycle for storage, CXMT's long-term prospects were solid, though the AI boom has undeniably rewritten the industry's logic.

Lessons from a Trillion-Yuan Valuation

CXMT's listing raises a fundamental question: Is the memory chip sector still a cyclical one? Historically, DRAM has been a classic cyclical industry, but AI is changing this. Demand for DRAM from large model training, inference, and AI data centers is now persistently high-growth and less tied to consumer electronics cycles. This shift, as Zhang Wei explains, allows for valuation based on price-to-earnings (PE) ratios rather than price-to-book (PB) ratios, a change validated by CXMT's staggering earnings.

The IPO also has broader implications for China's market structure. For years, A-shares were dominated by traditional sectors. The rise of CXMT and other tech giants reflects a revaluation of hard-tech assets and a shift in China's growth engine towards innovation. Looking at global markets, the US saw its top companies transform from traditional industries to tech behemoths like Microsoft and Apple. In contrast, Japan's post-bubble stagnation was linked to a lack of new growth drivers. CXMT's rise is a powerful indicator of this industrial transformation in China.

For CEB Stone Capital, the success of CXMT is a vindication of its investment philosophy. The firm believes that by focusing on the domestic industrial base and partnering with pragmatic, innovative entrepreneurs, RMB funds can achieve returns that rival or surpass those of USD funds. Looking ahead, CEB Stone Capital remains committed to hard-tech sectors like semiconductors, AI, commercial aerospace, and quantum technology, continuing to support breakthroughs in core technologies.

As CEB Stone Capital marks its 25th anniversary, Zhang Wei reflects on the immense opportunities born from decades of social change. He remains bullish on China's new economy, noting that while those in traditional sectors may feel pessimistic, the outlook in emerging technology fields is entirely different.