YMTC Cedes Control of Foundry Unit in Restructuring Ahead of Mega IPO
Chinese memory chipmaker Yangtze Memory Technologies Co. (YMTC) is ceding control of its foundry subsidiary to a state-backed investment platform, a strategic restructuring that clears a major regulatory hurdle ahead of what is expected to be one of the largest technology initial public offerings in China’s history.
According to Caixin Global, YMTC plans to sell its 39% stake in Wuhan Xinxin Semiconductor Manufacturing Co. Ltd. (XMC) to Wuhan Optics Valley Semiconductor Industry Investment Co., a local state-owned investment platform. The transaction will reduce YMTC’s holding from 68.2% to approximately 29%, transferring control to the state-backed buyer, which will manage a 47.9% stake alongside its concert parties.
Strategic Rationale
The restructuring serves multiple strategic purposes as YMTC prepares for its blockbuster listing on Shanghai’s STAR Market. By reducing its stake and transferring control of XMC, YMTC eliminates potential regulatory objections over related-party transactions and horizontal competition between the two entities — a key hurdle for IPO approval on the tech-heavy exchange.
A cleaner corporate structure with fewer cross-shareholdings is also more attractive to institutional investors. The move allows YMTC to focus on its core 3D NAND flash memory business while XMC continues as a specialty foundry under state ownership.
IPO Progress
YMTC officially began its IPO tutoring process on May 19, 2026, with the China Securities Regulatory Commission (CSRC) accepting its application. The South China Morning Post reported that Citic Securities and CSC Financial are acting as tutoring institutions, with AllBright Law Offices as legal counsel and Deloitte Touche Tohmatsu as auditor.
On the same day, XMC voluntarily withdrew its own STAR Market IPO application, which had been pending for approximately 20 months. XMC had aimed to raise 4.8 billion yuan (approximately $705.5 million). The simultaneous withdrawal signals that Chinese authorities are prioritizing YMTC’s flagship IPO over XMC’s standalone listing, consolidating resources behind the national champion.
Market Position and Financial Performance
YMTC is China’s only company capable of end-to-end 3D NAND flash chip manufacturing. The company has experienced a dramatic surge in performance, riding an AI-driven memory supercycle that has reshaped the global semiconductor landscape.
According to Caixin Global, YMTC tied for fourth place globally in Q1 2026 with a 13% share of the NAND flash market, up from 8% a year earlier. The company’s quarterly revenue exceeded 20 billion yuan ($2.9 billion), doubling year-on-year, driven by surging demand from AI-powered data centers.
Global NAND flash revenue hit $46 billion in Q1 2026, jumping approximately 250% year-on-year, with enterprise SSDs accounting for 43% of the total market. The rapid ascent underscores how China’s semiconductor sector is capitalizing on a severe global memory shortage — fueled by massive investments in AI data centers — to capture market share from sold-out industry leaders.
Background: XMC’s Journey
Founded in 2006 by the Wuhan government, XMC was one of the first semiconductor foundries in Wuhan, producing logic chips, contact image sensors, and NOR flash memory. According to Wikipedia, it became a YMTC subsidiary in July 2016 when Tsinghua Unigroup acquired a majority stake and merged it with YMTC.
XMC’s financials from its prospectus show it had revenue of CNY56.2 million ($8.3 million) and a net loss of CNY97.5 million in 2024. In H1 2025, operating revenue was CNY37.8 million with a net loss of CNY251 million ($36.9 million). Net assets stood at CNY136.6 billion ($20.1 billion) as of end of June 2025.
In July 2024, XMC partnered with Huawei to develop high-bandwidth memory (HBM) chips, critical for AI computing. Both YMTC and XMC are on the US Entity List — YMTC since December 2022 and XMC since December 2024 — restricting their access to American technology and equipment.
AI-Driven Memory Supercycle
The global memory chip industry is experiencing an unprecedented supercycle driven by AI infrastructure deployment. A multi-trillion-dollar North American data center buildout triggered a severe NAND supply squeeze in late 2025, transforming loss-making Chinese memory chipmakers into highly profitable enterprises virtually overnight.
YMTC’s IPO comes alongside that of CXMT (ChangXin Memory Technologies), China’s leading DRAM maker, which aims to raise 29.5 billion yuan ($4.3 billion) on the STAR Market. Together, these two IPOs represent a watershed moment for China’s semiconductor industry, though they also raise concerns about capital crowding out in the A-share market.
Implications and Outlook
The restructuring removes a major regulatory hurdle for YMTC’s STAR Market listing, with valuations reportedly around 160 billion yuan. Under state control, XMC will continue as a specialty foundry focused on NOR flash, logic chips, and HBM development with Huawei.
YMTC’s IPO and capacity expansion plans — from approximately 200,000 to over 500,000 wafers per month — could reshape the global NAND market currently dominated by Samsung, SK Hynix, Kioxia, and Micron. The company has pivoted to domestic equipment suppliers, with Chinese-made equipment now accounting for over 50% of its procurement despite US sanctions.
As China’s push for semiconductor self-reliance hits the capital markets, YMTC’s ability to raise substantial capital despite US sanctions demonstrates Beijing’s determination to build a self-sufficient semiconductor ecosystem. The success of this mega IPO will be closely watched as a bellwether for China’s broader tech ambitions.