China's memory giant CXMT makes stock market debut, challenging Samsung Electronics and SK Hynix

Changxin Memory Technologies, or CXMT, the Chinese chipmaker challenging the global DRAM market dominated by Samsung Electronics, SK Hynix and US-based Micron, made its mainland China stock market debut Monday. Widely regarded as a cornerstone of China's semiconductor self-sufficiency drive, CXMT plans to use the IPO proceeds to accelerate production capacity expansion and technology upgrades.

The company began trading Monday on the Shanghai Stock Exchange's Star Market, also known as the Ke Chuang Ban.

CXMT raised 57.92 billion yuan ($8.54 billion) through its IPO by issuing 6.69 billion new shares at an offer price of 8.66 yuan each. The new shares represent 10 percent of total shares outstanding, giving the company a market capitalization of 579.2 billion yuan at the offer price.

If the overallotment, or greenshoe, option is fully exercised, the share issuance could reach up to 7.69 billion shares, expanding the total fundraising to 66.61 billion yuan.

The offering is the largest IPO in Asia this year and the biggest ever by a Chinese chipmaker. It is also the second-largest IPO on China's mainland markets since Agricultural Bank of China's $10 billion listing in 2010.

CXMT plans to channel the IPO proceeds into expanding its production lines and advancing its DRAM technology.

Despite heightened volatility in semiconductor stocks in recent weeks, Bloomberg projected a share price gain on the first trading day, citing the company's valuation and strong subscription demand during the IPO process.

CXMT drew oversubscription ratios of more than 200-to-1 from retail investors and more than 500-to-1 from institutional investors during the subscription period.

Bush Chu of abrdn Investment said he would not be surprised if the stock opened 500 percent above the offer price, adding that he is "very positive on Chinese hardware broadly, including the local semiconductor supply chain."

On the Star Market, there are no limits on share price movements during the first five trading days after listing.

Bloomberg noted that if CXMT surges roughly 330 percent on its first trading day, it could overtake Industrial and Commercial Bank of China — which has a market cap of about 2.6 trillion yuan — to become the largest stock by market capitalization on China's mainland exchanges.

Meng Shen of Chinese investment bank Xiangsong said CXMT's major shareholders are government-backed investors and that the share price would therefore maintain an upward trajectory. He also said the listing could lift the broader Chinese hardware sector.

Research firm SemiAnalysis said CXMT's profitability is improving sharply on the back of rising DRAM prices driven by the AI boom, and that concerns about a potential memory price decline following CXMT's capacity expansion are overblown, at least over the next two years.

Bloomberg Intelligence said CXMT's price-to-book ratio at the offer price stands at 2.4 times, a 56 percent discount to the average of DRAM rivals SK Hynix, Micron and Nanya.

Bloomberg also noted that CXMT's market cap is only about one-tenth that of SK Hynix, suggesting room for further share price gains.

Chinese financial outlet Meiri Jingji Xinwen said views on the stock's post-listing trajectory are divided, with the optimistic camp pointing to still-robust demand for AI computing power and DRAM supply that continues to lag behind demand.

The outlet also noted a more cautious view: that since memory is a cyclical industry with roughly three-to-four-year cycles, the market may already be at a peak — and the moment right after listing could itself prove to be the high point.

According to market research firm Counterpoint Research, Samsung Electronics held a 38 percent share of the global DRAM market by revenue in the first quarter of this year, followed by SK Hynix at 29 percent and Micron at 22 percent. CXMT's share, however, climbed to 8 percent — up sharply from around 3 percent in the first quarter of last year.

Reuters, citing multiple anonymous sources, recently reported that amid the AI boom, Chinese memory chipmakers are now in a position to pick and choose their customers and have gained pricing leverage — with CXMT in some cases quoting higher prices than Samsung Electronics and SK Hynix.