CXMT becomes mainland China’s largest market capitalization after a record IPO, amid a global shortage of memory chips and the race for AI.
Chinese memory chip manufacturer CXMT made a sensational debut on the Shanghai Stock Exchange on Monday, seeing its shares soar by more than 500% on its first day of trading. This spectacular surge propels the company’s valuation to more than 450 billion euros, making CXMT the largest market capitalization in mainland China, ahead of giants such as mega-bank ICBC.
A record introduction and extraordinary figures
CXMT, founded in 2016 and based in Anhui (east), raised 66.6 billion yuan (8.6 billion euros) according to the Bloomberg agency thanks to this record listing on the Shanghai Stock Exchange. From the first exchanges on the STAR market, dedicated to technologies, the stock soared by more than 500%, allowing the company to reach a market capitalization of 3,500 billion yuan (453 billion euros), thus surpassing the Chinese mega-bank ICBC.
It is the largest IPO ever by a technology company in mainland China, surpassing the 46.3 billion yuan raised by semiconductor maker SMIC in 2020.
CXMT is now the fourth largest manufacturer of DRAM memory chips in the world, with nearly 8% of the global market share. The company aims to compete with leaders in the sector, notably the South Koreans SK hynix and Samsung Electronics, as well as the American Micron.
Global demand for cutting-edge memory chips is growing sharply, as they are essential components of artificial intelligence (AI) servers, along with other powerful semiconductors dedicated to data processing, such as those designed by the American Nvidia. This situation has led to a significant shortage of DRAM memory chips, also used in computers, smartphones and other electronic devices.
Tensions on the supply of memory chips have caused their prices to soar and therefore at the same time exploded the profits, and the stock prices, of manufacturers, starting with Samsung and SK hynix.
This month, SK hynix, already listed in Seoul, jumped 13% on its first day of trading on Wall Street, thus signing one of the largest IPOs in history. Its market capitalization on the South Korean Kospi index had exceeded the $1,000 billion mark in May, a threshold already crossed recently by Samsung Electronics and the American Micron.
Chinese ambitions and strategic breakthrough
CXMT’s breakthrough comes as Beijing now wants to compete with Taiwan and South Korea in this booming industry. “For the first time, China is taking a seat at the table (of the world’s memory chip champions), instead of being content with the role of an external observer,” says Zhang Guobin, founder of the Chinese specialist website eetrend.com. For him, the listing of CXMT represents a “major turning point in the global storage industry landscape and in the development trajectory of China’s semiconductor sector.”
Despite its presence on the Pentagon’s list of Chinese companies suspected of having ties to the military, CXMT continues to attract the interest of international actors. According to the specialist press, the American technological juggernaut Apple, faced with these shortages, is currently testing CXMT DRAM chips for use in its products.
