Hong Kong Listings Fuel Mainland Memory Firms' Global Ambitions

Mainland memory chip and storage solution suppliers are pursuing share listings in Hong Kong, signalling a strategic shift to fuel their global ambitions, according to analysts. Shanghai-based Montage Technology is a prominent example, poised for its Hong Kong stock exchange debut on Monday.

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Montage Technology, a designer of high-speed interconnect chips for data centres, is currently taking orders from institutional investors. The company is set to debut on the Hong Kong stock exchange on Monday.

Montage, which listed in Shanghai in 2019, expected to raise as much as HK$7 billion, or USD 896 million, from its Hong Kong initial public offering, or IPO. This capital aims to strengthen its global leadership, and seize opportunities in cloud computing and AI infrastructure, according to its prospectus.

In 2024, Montage was the world's largest memory interconnect chip supplier, holding 38.6% of the market, data from Frost & Sullivan showed. Bloomberg reported on Tuesday that the company planned to price its offering at the top of its range at HK$106.89, halting institutional orders a day earlier than planned amid abundant interest.

This dual-listing approach by Montage follows GigaDevice Semiconductor, which debuted in Hong Kong last month, after listing in Shanghai a decade ago. GigaDevice stated its expansion into the Hong Kong capital market supported a "long-term global growth strategy."

In Jan., at least three other memory product firms submitted applications for Hong Kong listings, including Hosin Global Electronics, XTX Technology, and Beijing XSKY Technology. XTX, a developer of code storage flash memories, withdrew its 2023 IPO application for Shenzhen Stock Exchange's ChiNext board.

Research Director MS Hwang at Counterpoint Research noted that this wave of memory firms hoping to offer Hong Kong shares "signals a strategic move in how the sector fuels its global ambitions." He highlighted that these five mentioned firms do not fabricate memory cells, the fundamental building blocks of computer memory, which can be packaged into memory products.

Hwang added that "having achieved sustainable scale and technical viability, these suppliers are possibly growing from domestic self-sufficiency to global exports amid a supply crunch."

Conversely, mainland companies that build memory cells, such as ChangXin Memory Technologies, or CXMT, and Yangtze Memory Technologies Corp, or YMTC, "may opt for domestic exchanges to navigate US regulatory scrutiny and insufficient track records in profit," Hwang said.

CXMT, China's largest dynamic random-access memory, or DRAM, maker, plans to raise 29.5 billion yuan, or USD 4.3 billion, from an IPO on Shanghai's Nasdaq-style Star Market. YMTC was considering a mainland IPO as early as this year with a potential valuation between 200 billion yuan and 300 billion yuan, Bloomberg reported in October, and YMTC affiliate XMC resumed its Shanghai IPO application in November.

The global memory industry has entered a "super cycle of price hikes." On Monday, market research firm TrendForce raised its price forecast for memory chips for the first quarter. This was attributed to "persistent AI and data centre demands" further worsening the global memory supply and demand imbalance.

TrendForce now expected conventional DRAM contract prices to jump between 90% and 95%, an increase from the previous projection of 55% to 60%. Similarly, NAND flash contract prices were expected to rise between 55% and 60%, up from an earlier projection of 33% to 38%.

"The longevity of this memory cycle remains the industry's looming question," Research Director Hwang commented. He added that the price hikes would "far exceed expectations through 2026, with supply and demand reaching equilibrium by 2027."

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• Mainland memory and storage firms are increasingly listing in Hong Kong to fund global expansion.

• Montage Technology, a leading interconnect chip supplier, aims to raise USD 896 million from its Hong Kong IPO to bolster its global leadership.

• Other firms like GigaDevice, Hosin Global Electronics, XTX Technology, and Beijing XSKY Technology are also pursuing or have completed Hong Kong listings.

Source: SCMP