CCSH Corporation, the parent company of Chinese memory chip giant Yangtze Memory Technologies Corp (YMTC), announced plans to raise at least 33 billion yuan ($4.9 billion) through an IPO on the Shanghai Stock Exchange's STAR Market. This move comes as the global artificial intelligence boom drives significant demand for data storage. YMTC's listing application has been accepted, and the company intends to use the proceeds to upgrade production lines and boost research and development. YMTC has seen rapid earnings growth, reporting net income of 33.4 billion yuan in the first three months of 2026, more than double its 2025 net income of 14.2 billion yuan.
Meanwhile, Alibaba Group Holding Ltd. experienced a 75% fall in profits for the June quarter, primarily due to increased spending on artificial intelligence. Despite this, the company's revenue rose 9% to 268.95 billion Chinese yuan, with its cloud division revenue increasing 45% year-on-year to 48.4 billion yuan. Alibaba's capital expenditure surged 75% to 67.7 billion Chinese yuan ($10 billion), driven by factors like increased CPU-compute capacity and higher chip component prices. Alibaba's U.S.-listed shares fell around 4.6% after these results were announced.
Analysts from Citi noted that while Alibaba's disclosures on its AI Labs and Applications provide clarity on its AI investments, the substantial 75% increase in capital expenditure and negative free cash flow of 44.7 billion yuan could raise concerns regarding capital needs and investment returns. This heightened spending on AI by major Chinese tech companies like Alibaba, Baidu, and Kuaishou, coupled with YMTC's significant fundraising, highlights the intense competition and rising costs within China's tech sector, especially concerning AI and chip supply challenges. The demand for AI memory is considered a major factor in YMTC's valuation, which could reach at least 1 trillion yuan ($148 billion).
