Three firms dominate the memory market. Is CXMT about to change that?

Three firms currently control the memory market, but a new player, Changxin Memory Technologies (CXMT), may alter this landscape. On July 27, CXMT debuted on the Shanghai Stock Exchange's tech-focused Star Market, witnessing its share price surge by up to 476% during intraday trading. CXMT's market capitalization reached 3.14 trillion yuan, eventually surpassing the Industrial and Commercial Bank of China for the title of China's largest company.

This surge underscores the increasing influence of China's semiconductor industry. Beijing's semiconductor policy has undergone a significant transformation due to the trade dispute with Washington. Initially focused on producing world-class chipmakers, the Chinese government now emphasizes reconnecting the semiconductor ecosystem and developing leading companies through a market-centric approach.

China's attempt at state-led semiconductor development, exemplified by the China Integrated Circuit Industry Investment Fund (Big Fund), aimed to boost chip self-sufficiency but ultimately proved unsuccessful. A notable failure within the Big Fund program was Wuhan Hongxin Semiconductor Manufacturing Company (HSMC), which was exposed as a fraud in 2017, receiving a US$18.5 billion investment to establish 14- and 7-nanometer manufacturing processes.

The company's plans fell apart, with its ASML equipment left unused after being pledged as collateral for banks. This scandal led to strict government control over subsidies and local government support, resulting in the third installment of the Big Fund focusing on areas disrupted by US export restrictions. CXMT's approach combines Western technology with long-term government investment, marking a shift in China's semiconductor ambitions.

Founder Zhu Yiming, who studied physics at Tsinghua University and later earned a degree in electronic engineering in the US, recognized the value of Silicon Valley's innovation. This realization prompted him to shift his focus to the semiconductor industry, leading to the creation of GigaDevice, the world's third-largest manufacturer of NOR flash memory.