By Yantoultra Ngui and Samuel Shen
SINGAPORE/SHANGHAI, July 27 (Reuters) – Shares of CXMT Corp soared 466% on their Shanghai trading debut on Monday following Asia’s biggest IPO this year, catapulting the chipmaker to the top of China’s stock market by valuation despite a recent selloff in global tech stocks.
The one-day surge was the largest among the world’s 10 biggest IPOs this year by deal value, based on Dealogic data. The jump was also the largest recorded among Chinese new listings valued at $5 billion or more in Dealogic data going back to 2006.
The stock closed at 49 yuan, compared to its sale price of 8.66 yuan per share, after reaching an intraday high of 55.03 yuan. The rally lifted CXMT’s market capitalisation to 3.3 trillion yuan ($487.73 billion), sharply up from $85.5 billion during the IPO process.
As U.S. curbs intensify competition in the global semiconductor race, CXMT has emerged as a key pillar of Beijing’s drive to build a self-sufficient chip industry and close the gap in strategic technologies such as artificial intelligence.
The explosive debut crowned CXMT as China’s most valuable listed company, overtaking banking giant Industrial and Commercial Bank of China, long the market’s heavyweight.
The chipmaker’s first-day gain also dwarfed the debut performance of China Resources New Energy, whose shares more than doubled after a $3.6 billion IPO earlier this month.
MARQUEE CHINESE CHIPMAKER
The strong debut provides a gauge of how much investors are willing to pay for a marquee Chinese chip firm, as local markets navigate volatility following an AI-led selloff.
Around 141.1 billion yuan worth of CXMT shares were traded in Shanghai on Monday, becoming the first A-share stock to exceed 100 billion yuan turnover in a day, according to local media reports.
Chinese chipmaking shares dropped 0.4% while semiconductor firms <.CSIH30184> climbed 0.8%, as fund managers repositioned for CXMT shares.
“Investor appetite is largely being driven by providing Chinese investors a way to meaningfully get exposure to the current memory supercycle,” said Jing Jie Yu, equity analyst at Morningstar.
Yu said the deal was priced at a steep discount, at roughly one times Morningstar’s estimated 2027 price-to-book value versus 2.1 to 2.3 times for global peers. But he argued the stock’s first-day surge was excessive, pointing to the memory sector’s cyclical nature and the longer-term drag from U.S. export controls that restrict access to advanced chipmaking technology.
CXMT’s astronomical rally, which values it at nearly half of U.S. rival Micron, has also sparked concerns of a bubble. Its expanding dominance in China has enabled it to raise prices for tech customers such as Huawei.
“The (CXMT) stock is too expensive and smells of speculation,” said Yuan Yuwei, hedge fund manager at Trinity Synergy Investments, adding that “it’s hard to say the optimism is sustainable.”
AI-linked stocks, including chipmakers, have been at the forefront of global equity market gains this year. But concerns about stretched valuations and whether hefty AI-related capital expenditures will generate earnings growth quickly enough have recently dampened investor enthusiasm.
In other Asian markets, tech-heavy South Korea’s KOSPI and Taiwanese stocks were up nearly 1% and down 0.5%, respectively, while MSCI’s IT index for Asia-Pacific shares outside Japan fell 4.7%.
Only 6.73% of CXMT’s enlarged share capital was freely tradable at listing, as most shares are locked up. The small initial float could magnify price swings and attract strong turnover.
SEVERE MEMORY SHORTAGE
CXMT, formerly ChangXin Memory Technologies, raised 57.92 billion yuan ($8.6 billion) in the IPO, the biggest mainland Chinese semiconductor offering on record. It surpasses SMIC’s $7.5 billion Shanghai share sale in 2020 and the IPO proceeds could rise to 66.61 billion yuan if an over-allotment option is fully used.
Asian chipmakers and companies building data centers and related infrastructure have ridden a wave of spending worth hundreds of billions of dollars from big tech firms. Earnings from so-called hyperscalers this week are likely to set the tone for near-term sentiment around the AI trade.
“The memory market remains tight with price increases expected to continue through the end of 2027,” Ellie Wang, an analyst at TrendForce, a technology research firm, said.
“Amid persistent supply shortages, many customers are seeking to diversify their memory supplier base, which should significantly benefit CXMT and create more business opportunities.”
In its prospectus, CXMT said AI demand had fuelled the latest upswing in memory chips, but warned the market could weaken if AI investment slowed or rivals added too much supply.
The company expects first-half revenue to rise more than sevenfold to 110 billion yuan to 120 billion yuan. It expects net profit of 66 billion yuan to 75 billion yuan, reversing a year-earlier loss.
($1 = 6.7691 Chinese yuan renminbi)
(Reporting by Yantoultra Ngui in Singapore and Yiming Shen in Shanghai; Writing by Scott Murdoch; Editing by Sumeet Chatterjee, Jamie Freed and Shri Navaratnam)
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