The initial public offering (IPO) of ChangXin Memory Technologies (CXMT) instantly made the Chinese chipmaker the most valuable publicly traded company on the Chinese mainland. The manufacturer of DRAM memory chips saw its share price rise by more than 470 percent on its first day of trading. Its market capitalization climbed to approximately 3.3 trillion yuan (about $487 billion).
CXMT debuted on the Shanghai Stock Exchange’s Star Market, the segment designed for innovative technology companies. The massive jump in share price stands in stark contrast to the recent weakness of technology stocks on international markets, according to the BBC.
The company manufactures DRAM memory used in AI data centers, smartphones, PCs, tablets, and other electronic devices. As such, CXMT operates in a market that has grown significantly in recent years due to global demand for AI infrastructure.
According to the company, the majority of the proceeds from the IPO will be invested in expanding production capacity and further developing memory technology. CXMT was founded in 2016 and is headquartered in Hefei, in China’s Anhui province.
Few freely tradable shares
According to analysts, the exceptional rise in the stock price is linked not only to interest in the Chinese semiconductor sector but also to the limited number of freely tradable shares. Only about seven percent of the shares were immediately available to investors, and this scarcity further drove up the price.
Furthermore, the interest reflects China’s ambition to become less dependent on foreign chip manufacturers. Advanced memory chips are among the strategic technologies in which Beijing has invested heavily in recent years.
Globally, the DRAM market is still dominated by Samsung Electronics, SK Hynix, and Micron. Together, these three manufacturers account for about 90 percent of global production.
SK Hynix is also benefiting from strong demand for AI memory. Earlier this month, the South Korean company raised $26.5 billion through an initial public offering in New York, the largest-ever U.S. IPO by a foreign company. The company, a major supplier to Nvidia, saw its shares rise by as much as 17 percent on the first day of trading. SK Hynix’s market capitalization had already surpassed the $1 trillion mark in South Korea earlier this year, also thanks to sustained demand for AI chips.