CXMT, China's largest DRAM maker, is set to list on Shanghai's Star Market on July 27.
According to the financial investment industry, CXMT will debut on the Shanghai Stock Exchange's Star Market on July 27. The offering price has been fixed at 8.66 yuan per share. Based on that price, the company's market capitalization is expected to reach approximately 588 billion yuan ($87 billion).
If the overallotment option is exercised in full, the total amount raised could reach as much as 66.6 billion yuan, which would set a record as the largest IPO in the Star Market's history.
The IPO has already demonstrated strong demand. CXMT's final effective subscription multiple in institutional bookbuilding came in at 462.85 times — roughly four times the 114.97 times recorded when Chinese foundry SMIC listed on the Star Market in 2020.
"The fact that memory chip technology, which had been kept confidential as a national strategic asset, is now being subjected to public market scrutiny through this IPO can be interpreted as a powerful expression of confidence in China's drive for memory semiconductor self-reliance," said Jo Cheol-gun, a researcher at NH Investment & Securities.
CXMT is currently the only DRAM manufacturer in China targeting mass production of HBM3 or higher, making it the central player in China's push to localize high-bandwidth memory (HBM) production. Backed by the country's memory self-sufficiency strategy, the company has rapidly expanded its production capacity and is growing its presence in the global market.
CXMT's share of the global DRAM market climbed sharply, from 4.1 percent in the first quarter of last year to 7.6 percent in the first quarter of this year. Research firm SemiAnalysis projects that share will expand to 17 percent by 2028.
Earnings have also improved on the back of favorable conditions in the memory chip sector. CXMT's sales in the first quarter of this year reached 50.8 billion yuan, a 719.1 percent increase from the same period a year earlier, while net profit attributable to controlling shareholders turned positive at 24.76 billion yuan. The company forecast first-half sales of 110 billion to 120 billion yuan and net profit attributable to controlling shareholders of 50 billion to 57 billion yuan.
Some observers warn that CXMT's rapid growth could pose a threat to Samsung Electronics and SK Hynix. Market wariness has grown following reports that Apple is in talks with the US government about adopting memory chips from CXMT.
Analysts, however, believe the actual impact will be limited. "While CXMT's listing may bring China-related risks back into focus, a meaningful technology gap still exists, and the company's current product lineup alone is unlikely to resolve the market's supply shortage — so the real impact on domestic memory chip makers should be limited," said Jo A-hae, a researcher at NH Investment & Securities.
Analysts are broadly upbeat about CXMT's share price outlook. "CXMT's profit growth is a function of industry conditions," said Lee Jong-wook, a researcher at Samsung Securities. "The company shares demand with global memory players and its stock should move in tandem with global memory share prices."
Park Yu-jin, a researcher at Hanwha Investment & Securities, said that if investor sentiment toward the memory sector remains healthy, CXMT's valuation could approach 1 to 2 trillion yuan, in line with its share of global DRAM sales.
Analysts also flagged the possibility of heightened volatility in Chinese equity markets around the listing. "As CXMT and YMTC approach their listings, the rally across the semiconductor value chain that has built up in anticipation may give way to a more volatile market once those listing events conclude," said Kang Min-hee, a researcher at Mirae Asset Securities.
Because CXMT will list on the Star Market, which is restricted to qualified investors, direct investment by ordinary retail investors in South Korea is not available. Indirect exposure through China semiconductor-focused ETFs is the practical alternative.
"Given that the benefits could spread beyond memory chips to the broader Chinese semiconductor value chain — including equipment, materials and packaging — a diversified investment strategy through China semiconductor ETFs such as the Global X China Semiconductor ETF and the TIGER China Semiconductor ETF remains a valid approach," said Park Su-jin, a researcher at Mirae Asset Securities.
moon@heraldcorp.com
