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In previous years, Hefei earned the moniker "China's Venture Capital Capital" from the internet community, thanks to its nurturing of numerous well-known technology companies. Now, this city renowned for its venture capital endeavors has achieved fresh triumphs, with the celebrated memory manufacturer Changxin Storage poised for a public listing. This raises the question: Has Hefei clinched another winning bet?

I. Did Hefei Win the Bet Again?

According to a report by Tencent Finance, in 2018, when the global memory chip market was nearly monopolized by overseas manufacturers, the domestic memory chip manufacturer Hefei Changxin Storage experienced two significant events in July. Firstly, its memory project successfully produced its inaugural wafer. Secondly, Zhu Yiming resigned as the general manager of GigaDevice, a company he founded, to become the CEO of Changxin Storage. He pledged not to accept a salary until Changxin turned a profit.

Eight years later, on May 17, 2026, the Shanghai Stock Exchange unveiled the latest iteration of the IPO prospectus for Changxin Technology Group Co., Ltd. on the STAR Market. The updated financial data revealed that in the first quarter of 2026, Changxin Technology's revenue soared to 50.8 billion yuan, marking a year-on-year increase of 719.13%. Its net profit attributable to the parent company was 24.762 billion yuan, a stark contrast to the 1.559 billion yuan loss recorded in the same period of 2025. The simultaneously disclosed semi-annual performance forecast indicated that the net profit attributable to the parent company for the first half of the year was expected to range between 50 billion yuan and 57 billion yuan, representing a year-on-year surge of 2244.03% to 2544.19%.

Hefei's gamble is now yielding manifold returns. The prospectus reveals that Changxin Technology lacks a controlling shareholder or actual controller. Shareholders directly holding more than 5% of the company's shares include Hefei Qinghui Jidian (21.67%), Changxin Integration (11.71%), the National Integrated Circuit Industry Investment Fund Phase II (8.73%), Hefei Jixin (8.37%), and Anhui Provincial Investment (7.91%).

Among these, Changxin Integration is wholly controlled by the Hefei State-owned Assets Supervision and Administration Commission (SASAC) through Hefei Industrial Investment. Qinghui Jidian's partnership shares can also be traced back to the Hefei state-owned asset system. Anhui Provincial Investment is effectively controlled by the Anhui Provincial SASAC, while Hefei Jixin serves as the company's employee stock ownership platform. In essence, Hefei's state-owned assets permeate the entire equity chain of Changxin.

II. How Did Hefei’s Bet on Changxin Storage Succeed?

Recently, Changxin Storage has once again delivered promising news, with domestic memory chip production on the rise, thrusting Hefei back into the limelight. Many label Hefei a "gambling city," where every wager appears to be an all-or-nothing move, yet it consistently emerges victorious. How does this phenomenon occur?

Firstly, the scarcity of domestic chips is a manifestation of long-standing structural contradictions. The high-end hardcore technology industry is characterized by formidable entry barriers, lengthy cycles, substantial investments, and sluggish returns, with the integrated circuit industry, particularly the memory chip sector, serving as a prime example. For an extended period, China's progress in chip localization has lagged, not solely due to inadequate technical capabilities but more so due to structural mismatches in local industrial layouts and capital logic. The industrial investment and support strategies of most local governments in China typically favor short-term, low-investment, and quick-return livelihood industries, traditional manufacturing, or asset-light service sectors. They tend to adopt a wait-and-see or even avoidant stance towards hardcore industries like memory chips, which necessitate sustained investments spanning a decade or more, endure prolonged initial losses, and face immense pressure from technological iteration.

Simultaneously, the profit-driven nature of capital and the short-term focus of local government performance evaluations have further exacerbated the challenges in nurturing domestic high-end chip industries. Market-oriented capital is more inclined to pursue trendy sectors and short-term high-profit industries, reluctant to bear the trial-and-error costs and time investments associated with hardcore technology industries. Similarly, most local state-owned asset investments prioritize stability and risk aversion, seeking short-term performance outcomes and lacking the patience and determination to delve deeply into hardcore technologies. This has resulted in persistent industrial gaps in the domestic memory chip sector, stagnant technological iteration, insufficient production capacity, and high external dependence, becoming a core bottleneck restricting the autonomous controllability of China's digital industry.

In contrast to the short-sighted strategies of most cities, Hefei has entirely broken free from short-term performance thinking, accurately recognizing the long-term value of integrated circuits as a national strategic industry, and daring to utilize core state-owned assets to invest in Changxin Storage. Hefei's core strength lies in establishing a patient capital system tailored for hardcore technology industries, eschewing short-term revenue and tax returns, unperturbed by initial corporate losses and technological trial-and-error, and accompanying corporate growth with a long-term perspective spanning a decade.

Secondly, Hefei's greatest asset is not managing enterprises with traditional administrative thinking. We have witnessed numerous instances where local governments invest funds and then commence meddling, today demanding the creation of a certain number of jobs, tomorrow requiring the relocation of the headquarters, and the next day seeking cooperation on image projects. Enterprises, originally engaged in a marathon, are pulled by administrative forces into a 100-meter sprint, ending up either exhausted or off course.

Of course, Hefei did not follow this path. A series of information indicates that the Hefei government maintains a very clear positioning for Changxin Storage. What is the role of state-owned assets? It is to provide funding and credit endorsement, nothing more. Professional matters are entrusted to professionals, and market judgments are left to the market to validate. Hefei refrains from interfering in the company's technological roadmap, operational decisions, or engaging in "performance projects" that appear impressive on paper but actually disrupt the company's rhythm.

Behind this lies a profound governance logic: The role of state-owned assets is to be "proactive," but this "proactivity" does not entail overstepping boundaries. Instead, it means providing support at critical junctures, offering resources when enterprises require them, and then stepping back to allow enterprises to compete in the market. This sense of propriety is easier said than done, demanding immense self-restraint from local governments. However, Hefei has achieved this and executed it exceptionally well.

Consequently, Changxin Storage has been able to progress in accordance with the objective laws of technological development in a relatively unadulterated environment, unencumbered by various administrative directives. Hefei's astuteness lies in knowing its boundaries, understanding what it should and should not manage. This resolve to "act where appropriate and refrain where not" is the rarest quality in state-owned asset participation in industrial investment.

Thirdly, the cluster effect of reshaping the industrial ecosystem is even more pivotal. Traditional local industrial investments generally suffer from a "single-point mindset," with most cities focusing solely on nurturing individual tech innovation enterprises, emphasizing only the capacity and output value of leading companies while neglecting the construction of upstream and downstream industrial chain support. This ultimately leaves enterprises isolated, grappling with issues such as missing supply chains, high supporting costs, and weak industrial collaboration, making it arduous to forge sustained industrial competitiveness.

Hefei's industrial layout thinking is highly systematic and forward-looking. Investing in Changxin Storage is essentially a strategic maneuver to leverage a chain-leading enterprise to drive the layout of the entire industrial chain, rather than a mere project investment. Hefei positions Changxin Storage as the core chain leader of the local integrated circuit industry, relying on its technological and production capacity advantages to attract upstream enterprises such as semiconductor materials, core equipment, and precision components to establish operations, while propelling the aggregation of downstream industries such as chip packaging and testing, terminal applications, and smart hardware. Simultaneously, it introduces supporting service resources such as R&D platforms, testing institutions, talent cultivation bases, and industrial funds, constructing a closed-loop memory chip industrial ecosystem. Additionally, Hefei boasts robust scientific research and technological advantages, with technology-oriented universities like the University of Science and Technology of China and Hefei University of Technology, as well as comprehensive institutions like Anhui University, continuously supplying a vast array of scientific and management talents to enterprises each year, providing a relatively solid human resource reserve.

The value of this ecological layout lies in thoroughly resolving the common issue of "single-point breakthroughs with incomplete chains" in the domestic chip industry. For Changxin Storage, a localized industrial cluster significantly reduces the company's supply chain costs, logistics costs, and collaboration costs, enhancing the efficiency of technological iteration and production capacity implementation. For Hefei, through a single chain-leading enterprise, it has incubated an entire hundred-billion-yuan integrated circuit industrial cluster, achieving a qualitative transformation from "project implementation" to "industrial formation" and from "single-point advantages" to "ecological advantages."

Fourthly, Hefei's success is a harmonious blend of a proactive government and an efficient market. For an extended period, there has been debate in academia and industry regarding the efficacy of industrial policies. Some locales over-intervene, leading to market failures, while others completely relinquish control, missing the window for industrial upgrading. Hefei's successful bet on Changxin Storage provides a quintessential Chinese-style solution: leveraging strengths, avoiding weaknesses, and each fulfilling its designated role.

The role of a proactive government lies in forward-looking布局 (layout), bearing the risks of original innovation, providing infrastructure, and offering credit endorsement. The role of an efficient market lies in allocating resources, selecting technological roadmaps, and maximizing efficiency. Hefei has fully harnessed the government's advantage of concentrating resources to accomplish significant tasks while utilizing market-based mechanisms to avert the immense risks of administrative intervention. The government acts as the "patient capital" it should be, while the market makes the "professional decisions" it should make. This is the essence of a true urban venture capital and the root of Hefei's success.

Examining Hefei's industrial investment logic over the years, although on the surface, many perceive a certain "gambling" element, most investments are proactive moves grounded in the logic of industrial development. Perhaps this is the key to Hefei's success as a renowned venture capital city.