If a city could be compared to a company, Hefei might be the most adept at making long-term investments.
On July 27, Cxmt Corporation made its debut on the STAR Market, with its share price surging 465.82% on the first day of trading, pushing its market capitalization past 3 trillion yuan at one point. This memory chip company, which started in Hefei, spent a decade navigating the toughest stretch of domestic DRAM industrialization, once again putting the city of Hefei in the spotlight.
Peeling back all the layers, what Hefei really answers is the fundamental role of local government in China's economy, said He Jianhua, a researcher at the Shanghai Academy of Social Sciences and president of the Yangtze River Delta Modernization Research Institute at Nantong University. He noted that a key shift for Hefei is that local government has moved from focusing primarily on allocating resources like land to becoming a long-term capital provider and ecosystem organizer for industrial development.
From 'Daring to Invest' to 'Knowing How to Invest'
Rewind to 2016. At that time, Hefei was not yet the 'new energy vehicle city' or 'chip city' we know today. However, industries like home appliances, automobiles, and flat-panel displays had already made the city realize that to move up the value chain, chips were an unavoidable critical link.
In 2016, Cxmt Corporation was founded in Hefei, Anhui Province, launching the domestic DRAM offensive under the code name 'Project 506'. That same year, Hefei Industry Investment Group partnered with Gigadevice to start the construction of Cxmt's 12-inch memory wafer manufacturing base. The first phase required a total investment of 18 billion yuan, with Hefei Industry Investment contributing 14.4 billion yuan.
However, the semiconductor industry is characterized by massive capital needs, long development cycles, and rapid technological iteration. For nearly a decade, Cxmt Corporation endured continuous substantial losses, which was a severe test of its investors' patience. While most market-driven capital shied away, Hefei's state-owned assets, through entities like Hefei Industry Investment Group and Qinghui Jidian, continuously injected funds without ever withdrawing midway.
He Jianhua believes that behind Cxmt's growth is a combination of 'knowledgeable entrepreneurs' and a 'daring-to-invest government'. The government provides capital and development space, while entrepreneurs handle technology roadmaps and market competition. Both parties form a deeper interest alignment through equity relationships.
From BOE Technology Group to Cxmt Corporation, and then to NIO, Hefei's bets were not on a single company but on the direction of industrial development. He Jianhua summarizes this approach as 'betting in line with national industrial direction': localization of displays, memory, and new energy vehicles. These projects all had clear industrial trends and real-world demand behind them.
Buying a Company, Building an Industry
The establishment of Cxmt Corporation in Hefei was not an isolated industrial choice. Behind it lies the city's accumulated industrial foundation, research resources, and the ability to make systematic arrangements around the industrial chain accumulated over many years.
In the past, local investment attraction was more about 'bringing in one company'. Hefei, however, increasingly considers from the outset whether a company's arrival can lead to upstream and downstream clustering, fill gaps in the supply chain, and further attract talent, technology, and capital. After Cxmt Corporation was established, related upstream and downstream enterprises kept gathering, and Hefei's integrated circuit industry gradually shifted from an early stage of 'filling gaps' to building an industrial ecosystem.
He Jianhua points out that a major feature of Hefei is 'using investment to guide attraction'. Through equity investments, it transforms the simple business attraction relationship between government and enterprises into a deeper community of shared interests. Simultaneously, it deploys innovation, capital, and talent chains around the industrial chain.
Furthermore, Hefei's scientific and educational resources play a significant role. With multiple universities including the University of Science and Technology of China and Hefei University of Technology, Hefei has begun to think more proactively about how to convert its 'scientific and educational stock' into 'industrial incremental growth'.
'What Hefei added were three converters: capital, organization, and application scenarios,' He Jianhua says. Capital provides a financial interface for scientific research achievements to enter the industry. Collaboration among the government, universities, and enterprises forms an organizational network connecting labs to production lines. Leading companies can then act as application scenarios for new technologies and products to enter the market.
Can the 'Hefei Model' Be Replicated?
From project initiation to its public listing, Cxmt Corporation took a decade. For the semiconductor industry, which requires massive and long-term investment, sustained capital infusion is a crucial safeguard for project advancement. He Jianhua notes that Hefei's 'patience' is not just the judgment of a single administration or decision-maker, but is gradually embedded into the fund system, risk tolerance, accountability exemption, and exit mechanisms. Transforming patience from a leadership style into an institutional design is what truly makes Hefei's experience worth studying.
In recent years, many cities have been searching for new industrial growth points. Artificial intelligence, new energy, the low-altitude economy, and embodied intelligence have become popular directions for local industrial layout. Can the 'Hefei Model' be replicated?
He Jianhua believes that before deciding to enter an industry, a locality must answer several questions: Is this direction aligned with national strategy and industrial trends? Is there an existing industrial base that can be leveraged? Is there professional capital available that can withstand a long cycle? Ultimately, are you investing in a single company, or an industrial ecosystem capable of continuous growth?
Hefei's current industrial landscape did not appear out of thin air. Whether it's display panels, memory chips, or new energy vehicles, all are connected to the city's previously accumulated industrial foundation, research resources, and actual needs.
'Therefore, one should learn its spirit, not just its form,' He Jianhua advises. Different cities have different resource endowments, and developing new productive forces must be tailored to local conditions. Instead of blindly chasing every hot sector in a 'big and comprehensive' manner, it is better to leverage local strengths and find chain links in specific segments where true competitiveness can be built.
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