Economic Observer reporter Zheng Chenye

On the evening of August 21st, the prospectus (application draft) for the IPO of Changjiang Storage Holdings Co., Ltd. (hereinafter referred to as "Changjiang Storage") on the Science and Technology Innovation Board was posted online. According to the prospectus, in the first quarter of 2026, Changjiang Storage achieved a revenue of 47.042 billion yuan and a net profit attributable to the parent company of 33.379 billion yuan; The gross profit margin of NAND Flash (flash chip) products is as high as 78.73%. In 2023, this company incurred a net loss of 19.181 billion yuan.

According to data from Jibang Consulting, in the first quarter of 2026, Changjiang Storage ranked third globally and first in China among NAND Flash manufacturers in terms of sales amount and shipment volume.

According to the prospectus, Changjiang Storage is the only IDM (integrated chip design, wafer manufacturing, packaging and testing) enterprise in China that has achieved mass production of 3D NAND flash memory chips. The IPO plans to raise 33 billion yuan, of which 20.8 billion yuan will be invested in upgrading production line technology and 12.2 billion yuan in research and development, and is eligible for the fifth set of listing standards on the Science and Technology Innovation Board.

In fact, the contract price of NAND Flash has been rising for four consecutive quarters, but it has slowed down a bit recently.

According to the latest data released by well-known semiconductor market research firm Jibang Consulting, the contract price of NAND Flash in the third quarter of this year still increased by 10% to 15% month on month, but compared to the surge of about 60% in the second quarter, the increase has begun to narrow. However, the contract price has already reached a historical high since statistics began. In the view of Lin Meibing, Chief Analyst of ICTIME, the slowdown in growth is not due to improved supply, but rather to the fact that the consumer end has reached its limit, and mobile phone and computer manufacturers are no longer willing or able to continue absorbing higher storage costs.

In a cyclical industry, for storage chip companies, submitting a prospectus during the industry's most prosperous period is a choice that does not require hesitation.

Gross profit margin exceeds 78%

The financial data of Changjiang Storage over the past three years fully reflects the cyclical fluctuations of the industry.

In 2023, the global storage industry is in a cyclical trough, with Changjiang Storage's revenue of 18.744 billion yuan and a net loss of 19.181 billion yuan. The gross profit margin of NAND Flash products is only 1%. However, Changjiang Storage did not shrink its production capacity during the loss period, but continued to expand its production. By the end of March 2026, it had built the largest 3D NAND Flash wafer production base in Chinese Mainland.

The production capacity expanded during the trough period becomes a profit amplifier when the industry recovers. In 2024, the industry rebounded, and Changjiang Storage's revenue rose to 45.203 billion yuan, with a net profit of 6.771 billion yuan. The gross profit margin of NAND Flash products recovered to 34%, and Changjiang Storage turned losses into profits.

In 2025, Changjiang Storage's revenue will be 63.185 billion yuan, with a net profit of 14.211 billion yuan and a gross profit margin of 37%. In the first quarter of 2026, Changjiang Storage's single quarter revenue was 47.042 billion yuan, which is nearly three-quarters of the full year of 2025, and the gross profit margin jumped to 78.73%. From 2023 to 2025, the compound annual growth rate of revenue for Changjiang Storage will reach 83.60%.

The reason why the financial indicators of Changjiang Storage have improved rapidly is very clear - Samsung Electronics, SK Hynix, and Micron Technology, the three major storage original factories, have concentrated their advanced production capacity on AI oriented HBM (high bandwidth memory) and enterprise level storage products, which have high unit prices and high profits. But after the concentration of production line resources towards AI, NAND Flash used in consumer electronics such as smartphones and computers should contract on the supply side, leading to a significant increase in prices.

According to data from Jibang Consulting, the contract price of NAND Flash surged by 55% to 60% in the first quarter, and increased by about 60% in the second quarter.

For Yangtze River Storage, the consumer market space provided by the three major original factories is currently its main source of growth. The statement in the industry trend section of the prospectus is that the international storage giant "will temporarily tilt production capacity to prioritize the supply of overseas customers, further amplifying the supply gap in the domestic consumer market".

In addition, AI also has a direct demand for NAND Flash. The prospectus of Changjiang Storage mentions that the massive KV cache data generated during the inference process of the big model (intermediate results of historical calculations that need to be saved and reused during the inference of the big language model) is being hierarchically stored from HBM to solid-state drives, using NAND Flash to handle low-frequency access of cold cache data, in order to alleviate the capacity bottleneck of HBM.

The prospectus also mentioned that the industry is shifting from the traditional architecture of NAND and DRAM (Dynamic Random Access Memory), which are independent of each other, to the direction of deep integration of the two types of storage media. The company will promote the mass production of high bandwidth flash memory technology in the medium and long term, and build HBM, high bandwidth flash memory DRAM、 The local SSD (solid state drive) has a four level near end storage hierarchy, and the role of NAND Flash in AI computing systems is still expanding.

Along with the increase in product prices, Changjiang Storage's own technological iteration is also lowering unit costs.

The Xtacking architecture (crystal stack) developed by Changjiang Storage has changed the traditional manufacturing method of 3D NAND. The traditional approach is to stack the storage array and peripheral circuits layer by layer on a single wafer, with higher layers causing more interference between the processes. Xtacking manufactures storage arrays and peripheral circuits separately on two wafers, and then combines them together through hybrid bonding (a process of aligning and connecting two wafers at the atomic level), using the most suitable process for each part.

From 2023 to the first quarter of 2026, the main products of Changjiang Storage have been iterated from the third generation to the fifth generation, with a continuous increase in storage density and a continuous decrease in unit cost.

It is worth mentioning that as early as 2025, South Korean media reported that Samsung Electronics had signed a patent license agreement with Changjiang Storage for hybrid bonding technology. Samsung will use Changjiang Storage's related patents in its next-generation NAND products, which is relatively rare among domestic semiconductor companies.

As of the end of March 2026, Changjiang Storage has been granted 5611 authorized invention patents, with a cumulative R&D investment of approximately 15.953 billion yuan and 4796 R&D personnel from 2023 to the first quarter of 2026. In the first quarter of 2026, the capacity utilization rate reached 98.02%, approaching full production, and the sixth generation 3D NAND product is already under development.

As of the disclosure date of the prospectus, Changjiang Storage's product line covers three major categories: storage chips (flash chips), intelligent terminal products, and solid-state drives. Among them, enterprise level solid state drives are targeted at leading domestic Internet companies and server manufacturers, consumer level solid state drives are mainly used for notebooks and desktops, and private brand "Zhitai" for individual users covers solid state drives and memory cards.

In terms of sales mode, Changjiang Storage adopts a sales mode that combines direct sales and distribution. Direct sales are aimed at leading customers such as the Internet and servers, and distribution channels cover small and medium-sized customers and regional markets. In 2025, the total sales proportion of Changjiang Storage's five major customers is 51.65%, and there is no situation where the sales proportion to a single customer exceeds 50%.

From the perspective of product structure, Changjiang Storage is shifting from selling flash memory granules to selling finished products. Flash memory chips are semi-finished products that are sold to downstream module factories to be made into solid-state drives and then sold to end customers, with limited added value; Enterprise grade solid-state drives, from chips to firmware to the entire disk solution, are all self-made, with greater profit margins.

After being ranked third globally

The global NAND Flash market has been dominated by leading companies such as Samsung, Kaixia, SanDisk, SK Hynix, Micron, etc. for over a decade.

Changjiang Storage was established in Wuhan at the end of 2016 and has risen to the third place in the world in less than a decade, becoming the first new face in this industry in over a decade.

The predecessor of Yangtze River Storage can be traced back to a project jointly funded by Tsinghua Unigroup, National Development Fund, Hubei Local Fund, and others. After entering bankruptcy reorganization proceedings in 2021, Yangtze River Storage underwent several years of equity restructuring. By 2025, the shareholding reform will be completed, and Ziguang Group will no longer hold equity in Yangtze River Storage.

Previously, Changjiang Storage had promoted the independent listing of its subsidiary Xinxin Shares, which mainly engages in the production of NOR Flash (a mainstream flash memory technology), image sensors, and special process integrated circuits. It was accepted by the Science and Technology Innovation Board in September 2024, but withdrew its IPO application on the same day as Changjiang Storage's coaching filing on May 19 this year.

In 2025, Xinxin Corporation's revenue will be approximately 5.784 billion yuan, which is not a significant proportion in the merger of Changjiang Storage. Its main assets and production lines have been included in the overall listing framework of Changjiang Storage. The subsidiary changed to the parent company and the small account changed to the large account, and the listing path of Changjiang Storage was completed on May 19th.

In terms of equity structure, Changjiang Storage currently has no controlling shareholder or actual controller. The top four shareholders are Hubei Changsheng (holding 26.54% of the shares, controlled by the state-owned assets system of Hubei Province and Wuhan City), Xinfei Technology (holding 25.35% of the shares), and the National Integrated Circuit Industry Investment Fund, namely the Big Fund Phase I (holding 11.97% of the shares) and Big Fund Phase II (holding 11.38% of the shares). The four major shareholders hold a total of 75.24% of the shares, all of which are backed by state-owned capital or national level industrial investment funds.

It is worth noting that the prospectus shows that the employee stock ownership plan of Changjiang Storage covers 1024 core management personnel and technical backbones, indirectly holding 1.29% of the company's equity through 30 shareholding platforms. The investment price is based on the net asset evaluation value per share filed with the state-owned asset supervision department on June 30, 2023, with a lock up period of 36 months, and the paid in capital will be completed in June 2025. The company confirmed share based payment expenses of 89.49 million yuan and 41.98 million yuan in the first quarter of 2025 and 2026, respectively.

In terms of the market, the prospectus also shows that the production capacity of domestic storage manufacturers can only cover about half of the local consumer market demand, and nearly half of the domestic consumer NAND Flash still relies on overseas manufacturers for supply.

As of the end of the first quarter of 2026, the capacity utilization rate of Changjiang Storage has reached 98.02%, close to full production. There is almost no growth margin in the existing production line, and the installation of equipment in the third phase of the factory has been launched. However, expanding production requires continuous burning of money. As of the end of 2025, the undistributed profit of Changjiang Storage will still be -36.65 billion yuan. Therefore, of the 33 billion yuan raised this time, 20.8 billion yuan will mainly be invested in upgrading production line technology, and 12.2 billion yuan will be invested in research and development, including sixth generation 3D NAND products and enterprise level solid-state drives for AI scenarios.

According to public information, the valuation of Changjiang Storage's previous round of old stock transfers was approximately 160 billion yuan. According to market news, the recent transfer price of its old shares has corresponded to a valuation of 400 billion yuan.

Changxin Technology (688825. SH) had a closing market value of 3.28 trillion yuan on its first day of listing on July 27th. The market is waiting to see how much the market value of Changjiang Storage will soar after its listing.

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(Author Zheng Chenye)