CXMT Shanghai debut sends chip stock up 465%
CXMT shares closed more than five times above their IPO price as investors piled into China’s top DRAM maker in Shanghai.
By Sal Moretti · Money Reporter
3 min read
The CXMT Shanghai debut was a rocket ride: shares in the Chinese memory-chip maker closed Monday at 49.01 yuan after being sold in the IPO at 8.66 yuan, a gain of 465%, according to MarketWatch.
Trading was frantic. MarketWatch reported that almost 3 billion shares changed hands, with turnover worth about $2.2 billion, as investors chased a rare public-market play on China’s push into memory chips.
Why did CXMT shares jump in Shanghai?
MarketWatch said investors were looking for exposure to the memory-chip sector, a corner of the semiconductor market tied closely to demand from artificial intelligence and electronics. CXMT, based in Hefei, is China’s leading DRAM producer and ranks fourth globally in memory chips behind SK Hynix, Samsung Electronics and Micron, according to the report.
DRAM, short for dynamic random access memory, is the short-term memory used by computers, phones and other electronic devices while they are running tasks. MarketWatch said CXMT’s DRAM chips are often used in lower-cost electronics, while the company is also working on more advanced high-bandwidth memory.
The listing raised about $8.5 billion from the sale of a 7% stake, MarketWatch reported. Underwriters have an over-allotment option that could lift the proceeds to about $10 billion.
CXMT plans to use the money to expand production. MarketWatch said the company aims to lift monthly wafer capacity from about 350,000 at the end of this year to 500,000 by December 2028.
Those figures would put CXMT closer to the production scale of its larger rivals. MarketWatch listed SK Hynix at 550,000 wafers a month, Samsung Electronics at 650,000 to 700,000 and Micron at 385,000.
What is CXMT’s role in China’s chip ambitions?
MarketWatch described CXMT as a key part of China’s effort to build a more self-sufficient AI supply chain, stretching from chips to advanced models. The report said Beijing wants to reduce dependence on foreign technology as competition with the U.S. over AI intensifies.
That ambition faces hardware limits. MarketWatch reported that CXMT’s effort to develop high-bandwidth chips has been slowed by U.S. restrictions on access to ASML’s most advanced chipmaking equipment.
The company has also appeared in a Washington fight over Apple’s supply chain. MarketWatch, citing Wall Street Journal reporting, said Apple Chief Executive Tim Cook has lobbied the president and the Commerce Department to allow Apple to use cheaper CXMT chips as a way to cut smartphone costs.
After Monday’s surge, CXMT’s market capitalization reached about $485 billion, making it the biggest stock in mainland China, according to MarketWatch. Hong Kong-listed Tencent was still slightly larger at $497 billion.
Globally, the company remains behind the biggest DRAM names by market value. MarketWatch put Samsung at $1 trillion, SK Hynix at $840 billion and Micron at $1 trillion.
Nomura analyst Donni Teng took an even more bullish view in a Monday report, according to MarketWatch. Teng set a 116 yuan price target on CXMT, implying a 1,239% gain from the listing price, and pointed to tight global supply and demand, CXMT’s production expansion and higher average selling prices.
Teng also argued that CXMT deserved a price-to-earnings multiple of 20 times, MarketWatch reported. That compares with roughly 5 times for the Korean chip makers, according to FactSet figures cited by MarketWatch, and 12 times for Micron.
The debut lands during a hot run for semiconductor stocks. MarketWatch said SK Hynix recently listed American depositary receipts on Nasdaq in the second-largest share offering ever, while the Philadelphia Semiconductor Index remains up 66% for the year despite a recent pullback.
This story draws on original reporting from MarketWatch.