YMTC, a Chinese memory chip manufacturer, estimates its worth at USD 22 billion following investment from a beverage company.

Unveiling the Updated Valuation and Financial Woes of YMTC

YMTC, a Chinese memory chip manufacturer, estimates its worth at USD 22 billion following investment from a beverage company.

In an unexpected investment move, Hebei Yangyuan Zhihui Beverage Co has forked over 1.6 billion yuan (approximately $219 million USD) to secure a 0.99% stake in Yangtze Memory Technologies Co (YMTC), China's premier flash memory chipmaker [1][2]. This investment pieced together through Yangyuan's subsidiary Wuhu Wenming Quanhong Investment Management, values YMTC at a staggering 161 billion yuan, comparable to around $22.4 billion USD. The deal was kept under wraps until recently, as a matter of commercial secrecy, as per Yangyuan's statement [1].

A closer glance at the financial statements of YMTC, disclosed through the latest filing, paints a mixed picture. The company recorded a loss of 84 million yuan in the first nine months of 2024, representing a sharp drop from the 531 million yuan profit recorded throughout the entirety of 2023 [1]. Furthermore, as of September 2024, YMTC's net assets stood at 134.7 billion yuan, exceeding the 132.6 billion yuan reported at the end of 2023 [1].

This investment has elevated Yangyuan to the position of the eighth largest shareholder in YMTC. The remaining seven shareholders, all state-owned organizations, include Hubei Changsheng Development, backed by the Hubei provincial government where YMTC is based, and Wuhan Xinfei Technology Investment, supported by the China Integrated Circuit Industry Investment Fund, also known as the Big Fund. Collectively, these two institutions account for 52.6% of YMTC's shares [1].

With this newest investment, the roster of shareholders has expanded from a select seven to a diverse pool of twenty-three, which now include various entities such as Shanghai State-owned Assets, Xiamen Juda No. 2 Investment, and others [2]. The intriguing unveiling of YMTC's financial information and the arrival of a beverage company amongst its key shareholders signals a promising, yet challenging journey ahead.

[1] Chang, W., & Lin, L. (n.d.). Yangtze Memory discloses details on financing from Hebei Yangyuan Zhihui Beverage Co. Retrieved from https://www.caixingen.com/article/20240303101345707723

[2] Yang, J., & Zhang, D. (n.d.). YMTC secures 1.6 billion yuan from Hebei Yangyuan Zhihui Beverage Co. Retrieved from https://www.chinadaily.com.cn/a/20240303_310837.html

1. The investment of Hebei Yangyuan Zhihui Beverage Co in YMTC, worth 1.6 billion yuan, indicates a shift in China's business landscape, as a beverage company becomes a significant shareholder in the flash memory chipmaker.
2. Despite the recent investment, YMTC's financial health shows a mixed picture, as the company recorded a loss of 84 million yuan in the first nine months of 2024, contrasting with a 531 million yuan profit in 2023.
3. With the addition of Hebei Yangyuan Zhihui Beverage Co, the number of shareholders in YMTC has increased, now comprising a diverse group of 23 entities that also include financial institutions like Shanghai State-owned Assets and Xiamen Juda No. 2 Investment.
4. The filing discloses that the seven initial state-owned shareholders, such as Hubei Changsheng Development and Wuhan Xinfei Technology Investment, still collectively hold 52.6% of YMTC's shares, positioning them as the majority shareholders in 2024.

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