Ten years of companionship yields trillions in returns! Uncovering the biggest winner of ChangXin's listing – Hefei

Original Author: Xu Chao

Original Source: Wall Street News

A city bets on an "impossible" project, endures a decade of consecutive losses, burning through 36.6 billion yuan, only to be rewarded with a trillion-yuan return — this is not fiction, this is Hefei.

On July 27, 2026, CXMT (688825) officially listed on the STAR Market. Its closing price of 49 yuan surged 465.82% from its issue price, propelling its market capitalization to over 3.2 trillion yuan, surpassing ICBC and claiming the top spot as the "King of Market Cap" on the A-share market. This largest DRAM manufacturer in China and fourth-largest globally finally stood in the spotlight of the capital market a full decade after its inception.

Behind this enterprise, the city that stood by it unwaveringly for a decade is now quietly cashing in on a historic bill. Based on a roughly 36.79% stake held by the Hefei state-owned capital system, the corresponding book market value exceeds 1.2 trillion yuan. Driven by the massive market cap increment from CXMT alone, the total A-share market value of Hefei's listed companies broke through 4 trillion yuan, making it the second city by A-share market cap in the Yangtze River Delta. A "bold gamble" from a central provincial capital has written the most stunning footnote in the history of China's industrial investment.

Two Decades of One Man's Perseverance

To understand why Hefei dared to invest, one must first understand the man, Zhu Yiming.

Zhu Yiming, a native of Yancheng, Jiangsu Province, was admitted to Tsinghua University in 1989. After completing his master's degree, he went to the US for further study, pivoting to the semiconductor field at Stony Brook University, State University of New York. After graduating, he worked in Silicon Valley as a project manager at a memory chip company.

There, he witnessed a worrying reality: memory chips are the semiconductor category with the highest consumption volume and highest standardization level, acting as the "staple food" for almost all electronic devices. Yet, in this arena, Chinese players were chronically absent.

In 2004, he made a life-altering decision — resigning to return to China and start a business. His initial capital was $920,000, pooled together by several Tsinghua alumni. After the Spring Festival in 2005, in a two-story, bare-brick room at Tsinghua Science Park, he founded what would become GigaDevice. Instead of directly challenging giants like Samsung and SK Hynix, he entered the NOR Flash market — seen as a "scrap" segment — to accumulate initial capital. In 2016, GigaDevice successfully went public.

But Zhu Yiming's ambition extended far beyond this. He once said, "If you compare a computer to a crown, the CPU is the jewel on the crown, but the memory is the base of the crown." "Whoever leads in memory technology will dominate the entire integrated circuit industry."

Creating a Chinese version of "Samsung Electronics" has been his ultimate, unchanging goal since day one of his entrepreneurial journey.

It was also in 2016 that the opportunity arrived.

A "Dead End" Others Dared Not Touch, Hefei Embraced

At the time, Samsung, SK Hynix, and Micron held a stranglehold on 96% of the global DRAM market, while China's independent production capacity was virtually zero. The DRAM industry demands immense capital, talent, and technology, and its strong cyclical nature causes drastic price fluctuations, making losses an almost unavoidable "entry fee."

Hefei, with its limited resources at the time, made up its mind: let's do it.

This became the strategic "Project 506": the CXMT 12-inch memory wafer manufacturing base, with a total investment of approximately 150 billion yuan. The first phase involved a total investment of 18 billion yuan, with Hefei Industry Investment contributing 14.4 billion yuan, an 80% share. For a city like Hefei in 2016, this was akin to betting the farm.

What is even more commendable is that Hefei chose to be a true "long-distance runner."

During CXMT's darkest hours of consecutive annual losses totaling over 36.6 billion yuan, Hefei's state-owned capital did not flinch or pull out. Even when other investors exited at the end of 2024, Hefei proactively stepped in, spending nearly 2 billion yuan to take over their existing shares. A spokesperson for Hefei Industry Investment once plainly stated the core logic behind this approach:

For weak links in the industrial chain like chips, the probability of achieving short-term capital returns is very low. Value investment in these areas inevitably requires large capital, long cycles, often spanning multiple cycles to finally realize returns.

This is not a gamble; it is a city's profound understanding of industrial dynamics and a sober assessment of national strategic needs.

China's DRAM from Zero to One: A Perilous Breakthrough

The path CXMT took is far more perilous than outsiders imagine.

Fujian Jinhua, established around the same time as CXMT, saw its multi-billion-yuan project halted right before mass production after being sued by Micron for alleged trade secret theft. CXMT chose a different path. Through legal negotiations, it paid "hundreds of millions of dollars" to obtain implementation licenses for over 10 million DRAM technical documents, 2.8TB of core data, and a vast array of Infineon DRAM technology patents from the bankrupt German memory giant Qimonda.

In 2018, Zhu Yiming made a shocking decision that sent ripples through the capital market: resigning as General Manager of GigaDevice to become the full-time Chairman and CEO of CXMT, pledging to forgo any salary or bonuses until the project turned profitable.

A year later, in September 2019, CXMT launched its independently designed and manufactured 8Gb DDR4 chip, completing the historic "from zero to one" breakthrough for mainland China's DRAM industry.

But "from zero to one" was just the entry ticket. The real test arrived in 2023.

That year, global DRAM prices plummeted over 40%. Shipments of smartphones and PCs declined, pushing the industry into a deep downturn. Leveraging their cost advantages, the Big Three employed "counter-cyclical" strategies, maintaining high output to further squeeze new entrants.

CXMT lost money on every chip sold, yet despite massive losses, it accelerated the development of the 1x nanometer process, breaking through key technical barriers for DDR5 mass production. The company recorded a loss of 16.34 billion yuan that year, the highest since its founding, bringing its cumulative debt over a decade to 36.65 billion yuan.

Any commercial entity would have cut its losses and walked away with such results.

But Hefei did not. In CXMT's darkest hour of consecutive losses, Hefei's state-owned capital repeatedly chose to increase investment, provide resources, and supply ammunition.

That very year, the Hefei Municipal People's Congress Standing Committee reviewed and approved a capital increase and expansion plan. At the end of 2024, when Country Garden Ventures exited, the Hefei municipal state-owned capital platform promptly spent nearly 2 billion yuan to take over the shares, without any hesitation.

Supporting this was an institutionalized fault-tolerant mechanism built by Hefei: project inclusion requires review by the Municipal People's Congress Financial and Economic Affairs Committee; major decisions must be voted on by the Standing Committee. As long as due diligence is compliant and procedures are followed, decision-makers are not held personally responsible even if a project ultimately fails. It is reported that Hefei has never disciplined any unit or individual for industrial investment failures.

It is this institutional guarantee of being "able to afford losses" that allowed Hefei, while other cities hesitated, to become true patient capital.

Earning 400 Million a Day, Filling a Decade of Losses in One Quarter

The turning point arrived quietly in 2025.

The demand for AI computing power completely detonated a super memory cycle. An AI server requires three to five times the DRAM of a traditional server. As Samsung, SK Hynix, and Micron shifted their production capacity towards higher-margin HBM, a significant supply gap in conventional DRAM opened up.

CXMT had just completed its product iteration from DDR4 to DDR5. Capacity utilization across its three 12-inch fabs steadily rose from 85% to 95%. Surging demand, shrinking supply, and capacity release — three favorable factors combined to create a textbook "Davis Double Play."

In 2025, CXMT achieved its first annual profit, with a net profit attributable to the parent company of 1.875 billion yuan.

In the first quarter of 2026, revenue reached 50.8 billion yuan, with a net profit attributable to the parent company of 24.762 billion yuan, a year-on-year increase of 1688%. This translates to earning nearly 400 million yuan per day. At this pace, CXMT will have nearly filled all its losses from the previous decade in less than six months.

At this moment, Hefei's initial "first bet" of 14.4 billion yuan, along with a decade of subsequent follow-on investments, finally realized its value.

Beyond Trillions in Paper Profits: A City's Industrial Transformation

The 1 trillion yuan in book gains is merely the tip of the iceberg for Hefei's returns.

A decade ago, the site of CXMT's factory in Hefei's northwestern outskirts was a rural landscape of farmland and wilderness. Today, massive grayish-white factory buildings stretch for hundreds of meters, with dense silver ventilation ducts, corridors, and industrial pipes crisscrossing overhead. Around the factory, R&D buildings, employee dormitories, canteens, commercial centers, fast-food restaurants, and supermarkets have opened one after another, playfully nicknamed "Changgang CBD."

By the end of 2025, CXMT's total workforce had reached 19,300, including over 6,000 R&D personnel. Most are between 25 and 35 years old and hold master's degrees or higher. These young, highly educated, high-earning employees are fundamentally changing the consumption patterns and urban character of the surrounding area.

The changes at the industrial chain level are even more profound.

Leveraging the driving force of CXMT as a flagship company, Hefei has attracted over 450 integrated circuit enterprises, forming a complete industrial chain covering design, manufacturing, packaging, and testing. It has become one of the few cities in China with a full IC industry chain. In 2016, the output value of Hefei's IC industry chain was only about 18 billion yuan; by 2025, it had reached 151.4 billion yuan, a 7.4-fold increase.

The industry synergy effect is even more noteworthy. CXMT's memory chips, BOE's display panels, and NIO and BYD's new energy vehicles together form Hefei's iconic "Chips, Screens, Cars, and Integration" industrial landscape. They create an interdependent and deeply integrated industrial ecosystem — Hejing Integration manufactures display driver ICs for BOE, while Jiefa Technology supplies automotive-grade MCUs to BYD and NIO. The industrial chain's internal circulation is accelerating.

The "Hefei Model": Why Others Can't Replicate It

Following CXMT's listing, external attention has once again focused on the "Hefei Model." In reality, about 50 delegations visit Hefei every month. Millions of words in research reports have been written, yet a truly replicable model has not emerged.

Hefei itself articulates this clearly: the model has four prerequisites, none of which can be missing.

Sufficient financial resources. In 2008, Hefei invested 6 billion yuan in BOE, equivalent to 20% of that year's fiscal revenue. The CXMT project endured a decade of losses totaling 36.6 billion yuan. Without the corresponding fiscal flexibility, this problem is simply unsolvable.

Robust fault-tolerant mechanism. Hefei was among the first in China to establish a "due diligence exemption" system. As long as project decisions follow procedures and due diligence is thorough, decision-makers are not held personally responsible, even if the project incurs losses. The local government has never disciplined any unit or individual for investment failures. This is the institutional foundation that enables "daring to invest."

Accurate industrial judgment. Every major move by Hefei occurred during the industry's coldest moment — BOE during the global display panel industry's massive losses; NIO when its stock price fell to $1 and 18 cities turned it away; CXMT when no Chinese player existed in the global DRAM market. This counter-cyclical allocation relies on years of systematic analysis of industrial trends, not chasing the latest fad.

Sufficient policy window. Hefei capitalized on China's golden decade of climbing from low-end to mid-to-high-end manufacturing. The demand for domestic substitution was real and urgent. As noted by the Song Xutao team at Guojin Securities, CXMT "caught" the triple wave of domestic substitution, memory security, and AI demand expansion. This, in itself, demonstrates the foresight of national strategic planning.

A Paradigm Shift in Chinese City Development

Behind CXMT's listing lies a broader proposition: beyond land finance, urban development needs a new engine.

Hefei's path offers one answer: use state capital for early-stage investment, then leverage the capital market for amplification, building a system capable of continuously generating good companies. From 2015 to 2021, the peak period of the real estate boom, the total land transfer fees in Hefei amounted to approximately 551.6 billion yuan. Yet, the book profit on the shares held by Hefei's state-owned capital from just CXMT alone approaches nearly 1 trillion yuan.

This is not just Hefei's story. It signifies a paradigm shift in the logic of competition among Chinese cities: shifting from "attracting investment and attracting businesses" to "cultivating industries"; from "land finance" to "equity finance"; from "transplanting a big tree" to "nurturing an entire forest."

The listing bell of CXMT rings as the final answer sheet for Hefei's decade of patient capital, and an unavoidable test for many more cities.