From Sand to Chips, Hefei's Semiconductor Alchemy

On July 27, 2026, the moment the ceremonial gong rang at the Shanghai Stock Exchange, the history of China's capital market was rewritten.

A memory chip firm closed its first trading day with a market capitalization of 3.28 trillion yuan, surpassing that of the Industrial and Commercial Bank of China.

This is no financial stock, no energy giant, no internet platform. It is a manufacturing enterprise that refines silicon from sand, etches circuits onto silicon wafers, and turns those circuits into memory chips.

Its headquarters is not in Shenzhen, not in Shanghai, not in Beijing.

It is in Hefei.

How did this inland city, mocked two decades ago as "China's largest county seat", manage to incubate the world's fourth-largest memory manufacturer? How did a company founded only in 2016 see its market value outstrip ICBC a decade later?

The more critical question is: when such a massive enterprise settled in Hefei, what exactly grew up around it? How did sand gradually transform into chips? And who are the companies that became its neighbors?

Project 506

On May 6, 2016, a code name was born.

The then Chairman and General Manager of GigaDevice, Lao Zhu, sat down with Hefei municipal leaders to discuss the construction of a DRAM project. This day was later referred to as "506", and the project was named after it: the "506 Project".

The backdrop at the time was alarming: Samsung Electronics, SK Hynix, and Micron controlled over 95% of the global DRAM market, while Chinese mainland had almost no large-scale DRAM manufacturing capacity. The core technology of the memory modules installed in every mobile phone, computer, and server worldwide was firmly held by these three overseas giants.

Lao Zhu wanted to make this happen. But he couldn't do it alone. DRAM is a capital-intensive industry: a single 12-inch wafer production line requires investments amounting to tens of billions of yuan, with extremely high technical barriers, and the yield ramp-up cycle is measured in years.

The Hefei authorities gave the green light.

In 2017, GigaDevice and Hefei Industrial Investment officially signed a cooperation agreement. The project had an initial budget of 18 billion yuan: GigaDevice invested 3.6 billion yuan for a 20% stake, while Hefei Industrial Investment contributed 14.4 billion yuan for an 80% stake.

And this was only the first phase. The total investment in the entire Changxin DRAM chip base reached 150 billion yuan, making it the largest single industrial project in Anhui province at that time.

Why did Hefei commit such massive resources?

The answer lies in a planning document drafted three years earlier. In 2013, Hefei municipal government issued the "Integrated Circuit Industry Development Plan (2013–2020)", which first proposed building a "China's Silicon Valley". Changxin was the most critical piece on this chessboard.

China's First Domestic DRAM Chip

In September 2019, Changxin's 12-inch wafer fab went into operation.

The first product to roll off the production line that day was an 8GB DDR4 memory chip, marking a breakthrough from 0 to 1 for mainstream domestic DRAM chips in China.

From the project launch in May 2016 to the product release in September 2019, it took three years and four months. During this period, Changxin completed "skip-generation R&D" from the first-generation process technology platform to the fourth-generation, achieving product coverage and iteration from DDR4 and LPDDR4X to DDR5 and LPDDR5/5X.

What does "skip-generation R&D" mean? Samsung and Hynix spent 20 years moving step by step from DDR1 to DDR5, with each generation separated by three to five years. Changxin did not have a 20-year window. It had to skip several intermediate generations to directly catch up with mainstream process technologies.

After the first DDR4 chip was released in 2019, Changxin's products gradually iterated to DDR5 and LPDDR5/5X — two products that are now the mainstream configuration for global AI servers and flagship smartphones.

But technological breakthroughs do not equal profitability. In the following years, Changxin's situation was far more difficult than outsiders imagined.

From a 16.3 Billion Yuan Loss to a 24.7 Billion Yuan Quarterly Profit

Changxin Technology's financial data is like a roller coaster ride.

In 2023, its revenue was 9.087 billion yuan, with a net loss of 16.34 billion yuan attributable to shareholders.

In 2024, the net loss attributable to shareholders was 7.145 billion yuan.

But in 2025, the trend reversed. Full-year revenue reached 61.799 billion yuan, a year-on-year increase of 155.62%; the net profit attributable to shareholders was 1.875 billion yuan, marking the first return to profitability. Non-GAAP net profit reached 5.316 billion yuan, and the gross margin of its main business rose to 41.02%.

By the first quarter of 2026, the figures exploded: revenue hit 50.8 billion yuan, a year-on-year surge of 719.13%; net profit attributable to shareholders reached 24.762 billion yuan, up 1688.30% year-on-year.

Earning 24.7 billion yuan in a single quarter — the total losses of 2023 and 2024, which amounted to 23.5 billion yuan, were not only recouped in one quarter but even exceeded.

The company expects its 2026 first-half revenue to be between 110 billion and 120 billion yuan, with net profit attributable to shareholders ranging from 50 billion to 57 billion yuan. At this pace, its full-year net profit could exceed 100 billion yuan.

Why this explosive growth? There are two reasons: first, AI-driven global DRAM supply shortages have pushed prices continuously upward; second, Changxin's own production capacity and yield ramp-up are complete, with a capacity utilization rate reaching 95.73% in 2025.

Changes in global market share tell an even clearer story. According to Counterpoint data, Changxin's global DRAM market share was 3% in Q1 2025, rose to 4% in Q2, 6% in Q3, and jumped to 8% in Q4 — more than doubling within a single year. By Q1 2026, it stabilized at 8%, ranking fourth globally, right behind Samsung, SK Hynix, and Micron.

But Changxin's explosive growth was not a one-man show.

The Supporting Ecosystem: From Sand to Chips

A DRAM chip, from nothing to finished product, must go through the following process:

Polysilicon purification → crystal pulling to form silicon ingots → slicing into silicon wafers → photolithography → etching → thin film deposition → chemical mechanical polishing (CMP) → cleaning → dicing → packaging → testing → finished product.

Every single step requires specialized enterprises and equipment. Changxin focuses on the wafer manufacturing segment in the middle of the chain. But without upstream equipment, materials, and downstream packaging and testing support, it would be an isolated island.

Hefei's industrial ecosystem has precisely connected these "islands" into a continent.

In July 2026, Securities Times reporters conducted an on-site visit to Changxin Technology's core production campus and discovered an astonishing phenomenon: the area around Changxin's facility is densely packed with semiconductor equipment, materials, and testing enterprises, all providing nearby supporting services.

Hefei Proton Storage, separated from Changxin Technology by only a single road, mainly provides storage chip packaging and testing services for Changxin. With an investment of about 10 billion yuan, construction started in March 2021, and the plant was officially put into operation in December that same year. In May 2026, the company stated that its Hefei packaging and testing facility is currently operating at full capacity and is actively expanding production to meet customer demand.

Xinqiao Integrated Circuit Science and Technology Park is also adjacent to Changxin. Spanning 172 acres, the park was planned synchronously with Changxin's "506 Project" back in 2016, opened in 2019, and now hosts over 20 upstream and downstream semiconductor enterprises.

Who are the companies in the park?

On the equipment side: Hefei Naura Microelectronics Equipment Co., Ltd. (a subsidiary of Naura Technology) provides key equipment such as etching and thin film deposition systems; Hefei JZT Integrated Circuit Technology Co., Ltd. (under JZT); ACM Research (Shanghai) has an office here; Kaiyue Semiconductor independently develops photoresist coating and developing machines, having upgraded from remanufacturing imported second-hand equipment to independent innovation; Wanwei Kelin provides semiconductor equipment.

On the packaging and testing side: Xinfeng Technology represents a semiconductor packaging and testing project.

Materials and components: HeMeng Precision and Sanyue Vacuum provide semiconductor components and materials.

Supporting services: Qichuan Technology and Huahai Qingke provide semiconductor-related supporting services.

Beyond that, across the broader Hefei region, there are even more supporting enterprises. Among upstream equipment suppliers, Naura Technology, Advanced Micro-Fabrication Equipment (AMEC), Piotech, and Huahai Qingke have supplied key equipment such as etching, thin film deposition, and CMP systems to Changxin.

In terms of high-end materials: Yake Technology supplies precursor products; Guanggang Gas and Jinhong Gas provide electronic specialty gases; Tongcheng New Materials and Jingrui Electronic Materials have entered the photoresist supply chain.

The downstream customer lineup is equally impressive: Alibaba Cloud, Tencent, ByteDance, Lenovo, Xiaomi, Honor, and OPPO.

In this IPO's strategic placement, semiconductor industry chain companies such as AMEC and Piotech, as well as downstream enterprises including Xiaomi, TCL, Kuaishou, NIO, and Alibaba Cloud, were all allocated shares, forming deep bonds through equity investment and business collaboration.

According to incomplete statistics, more than 30 A-share listed companies are involved in Changxin Technology's ecosystem. Hefei's integrated circuit industry output value grew from approximately 18 billion yuan in 2016 to 151.4 billion yuan in 2025, an increase of over 7 times with a compound annual growth rate exceeding 26%. The city now has more than 400 integrated circuit enterprises.

This is not just one company — it is a complete industrial chain.

A Single Factory Revitalizes an Entire Street

Changxin's industrial driving effect even extends to roadside food stalls.

Changxin Technology's facility is located in the Changgang Community near Hefei Xinqiao International Airport. Securities Times reporters found that the most bustling area around the campus is along Shuofang Road, playfully called "Changgang CBD" by local residents.

Both sides of Shuofang Road are densely packed with restaurants, supermarkets, hotels, pharmacies, hair salons, entertainment venues, and other businesses, with some stores open 24/7. The night market stays open until two or three o'clock in the morning. A fried skewer stall owner said that at least half of his business comes from Changxin Technology's employees or clients.

The hotel situation is even more striking. A Hampton by Hilton hotel on Shuofang Road has more than 170 rooms, which are almost fully occupied on workdays, with over 80% of the guests being business travelers visiting Changxin. Some long-term high-frequency customers even book entire rooms for extended stays.

With frequent business trips by Changxin's upstream and downstream clients, the accommodation demand far exceeds supply — it is normal that no rooms can be booked on workdays.

A supplier's on-site resident staff told reporters that he rented an apartment nearby, brought his wife and child over, and has been stationed here for more than half a year. At 10 p.m., delivery vehicles are still entering and exiting the freight corridor on Xinhuai Avenue. A truck driver who traveled from Beijing said that a single truckload of equipment is worth over 100 million yuan.

South of the campus, the second-phase 12-inch memory wafer manufacturing base project is under construction around the clock, with tower cranes operating and machinery roaring. The production line runs 24 hours a day, non-stop.

The busyness of a single production campus reflects the vitality of the entire industrial chain.

Hefei's Three Leaps Forward

Changxin was not Hefei's first high-stakes bet, nor will it be the last.

Hefei's industrial rise has been summarized by outsiders as three leaps: "Panels, Chips, and Vehicles".

The first leap: Panels. In 2008, Hefei postponed its subway construction and allocated roughly one-third of its local fiscal revenue to introduce BOE, which was then losing over 1 billion yuan, to build China's first 6th-generation LCD panel production line. Later, BOE became China's leading panel manufacturer, building multiple production lines in Hefei and driving the new display industry output value in the Xinzhan High-Tech Zone to exceed 120 billion yuan.

Hefei surpassed Shenzhen to top the list of China's top 10 new display industry cities.

The second leap: Chips. In 2016, the "506 Project" was launched, and Changxin Memory settled in Hefei. Hefei Industrial Investment contributed 14.4 billion yuan, holding an 80% stake. With a total investment of 150 billion yuan, it was the largest single industrial project in Anhui province at the time.

The third leap: Vehicles. In 2020, Hefei Construction Investment joined forces with three levels of state-owned capital platforms to raise 7 billion yuan and introduce NIO, which was on the verge of bankruptcy. After NIO's China headquarters settled in Hefei, major automakers including BYD and Volkswagen, along with their supporting enterprises, followed suit. In 2025, Hefei's new energy vehicle output reached 13.76 million units, ranking first among Chinese cities for two consecutive years, with the industrial cluster's revenue exceeding 600 billion yuan.

These three leaps have forged Hefei's industrial framework of "Chips, Panels, Automobiles, and Integrated Home Appliances": chips, display panels, automobiles, home appliances, and artificial intelligence mutually support each other.

In 2025, Hefei's GDP reached 1.42 trillion yuan, ranking 18th nationwide. Its GDP growth rates in 2024 and 2025 ranked first consecutively among China's top 20 economic cities. In Q1 2026, its GDP hit 322.96 billion yuan, a year-on-year increase of 6.8%, taking the top growth spot among 29 Chinese cities with a GDP exceeding one trillion yuan.

From a city with a GDP of only 58.97 billion yuan in 2005 — mocked as "China's largest county seat" — to a "double-ten" city today with a trillion-yuan GDP and a population of over 10 million, Hefei has climbed 70 places in the national rankings over two decades.

Is Hefei a Good Place for Employment and Life?

After Changxin's IPO, a practical question is repeatedly raised: is Hefei a suitable city for ordinary people to work and live in?

Let's look at employment first.

Hefei plans to create 200,000 new jobs in key industry sectors in 2026. Since 2023, it has hosted the annual "Hefei Invites You: 200,000 Jobs for You to Choose From" series of job fairs, which have facilitated 278,000 employment intentions over three years. The city attracts more than 350,000 university graduates each year.

In terms of salaries, semiconductor technicians who switched jobs from Shanghai to Hefei report that their pay has decreased by only about 10%, but their job stability is much higher, with a far lower risk of mid-career unemployment than in first-tier cities.

Next, let's look at the cost of living.

In June 2026, the average price of new homes in Hefei was approximately 17,900 yuan/㎡. By district: the highest average price of 31,767 yuan/㎡ is in the Zhengwu District, followed by 24,405 yuan/㎡ in Binhu District, 24,373 yuan/㎡ in the High-Tech Zone, 23,678 yuan/㎡ in the Economic Development Zone, and 23,084 yuan/㎡ in Baohe District. Prices in far suburban areas range from 7,000 to 8,000 yuan/