(Yicai) Sept. 29 -- Shares of Changxin Memory Technologies rose after the Chinese DRAM chipmaker said it will invest CNY35 billion (USD5.2 billion) to enhance its memory wafer testing and new product research and development capabilities, with much of the financing sourced from excess proceeds of its July initial public offering.

CXMT [SHA: 688825] finished up 3.3 percent at CNY55.55 (USD8.28) per share in Shanghai today.

Of the total investment, CNY24.1 billion will go to setting up a 12-inch memory wafer R&D base in Hefei, with construction taking 30 months, the Hefei-based company said late yesterday. CNY10.8 billion will be used for a new wafer testing plant at another site in the city that will provide testing and module assembly services for dynamic random-access memory chips. Its construction will take 37 months.

The filing did not disclose further details of the two projects, such as key R&D focuses of the first project and the annual capacity for the wafer testing and module assembly project. It only stated that the R&D base project will receive CNY 13 billion in support from excess IPO proceeds, while the wafer testing plant project will get CNY 5 billion of such funds.

The AI-fueled boom and resulting shortage of memory chips have buoyed investor optimism over Changxin Memory Technologies’ business outlook. The firm completed its IPO on the Shanghai Stock Exchange in late July, raising far more than its target fundraising amount. After exercising the green shoe option and deducting various issuance costs, its net proceeds stood at CNY 66.3 billion, with excess IPO proceeds totaling CNY 36.8 billion. The ample capital provides support for the company to invest in more projects.

The new R&D project will help CXMT maintain its technological edge and accelerate the introduction of products that more closely match demand, deliver better performance, and offer greater competitiveness, it said. The company expects the project, in turn, to strengthen its core competitiveness and resilience to business risks.

The new testing facility will help address two potential constraints: insufficient testing capacity at external chip packaging-and-testing providers, and a potential shortage of in-house testing capacity as CXMT expands wafer production, the company said. Bringing more testing capacity in-house will also reduce the cost of checking the firm’s DRAM chips, it added.

Editor: Tom Litting