Volkswacht Bodensee - Chinese chipmaker CXMT soars 500% on debut as AI fuels shortages

The race to build data centres that power artificial intelligence has fuelled a global memory chip shortage while causing business to boom for the companies that produce them.

ChangXin Memory Technologies (CXMT) is the world's fourth-largest maker of DRAM memory chips, with around eight percent market share.

It wants to rival South Korea's Samsung Electronics and SK hynix, and US giant Micron, companies that have also seen profits and share prices skyrocket in recent months.

The firm's shares rocketed 530 percent Monday, taking its market capitalisation to 3.65 trillion yuan ($540 billion) -- surpassing megabank ICBC as mainland China's most valuable company.

The interest "reflects investors' overwhelmingly bullish sentiment toward China's flagship domestic memory chip firm", Larry Yang, chief economist of First Seafront Fund Management, told AFP.

China's government is increasingly counting on homegrown hardware to boost its position in the AI race against the United States.

Going public allows CXMT to secure capital that will "lay a solid foundation" for expanding production capacity and spending on chip development, Yang said.

"Meanwhile, it will boost the company's global influence and help lift its market share in the worldwide memory chip sector."

That view was shared by Zhang Guobin, founder of Chinese specialist website eetrend.com.

He called the initial public offering a "turning point in the global storage industry landscape and the development trajectory of China's semiconductor sector".

- Memory shortage -

CXMT, founded in 2016 and based in the eastern region of Anhui, had raised 66.6 billion yuan ($9.8 billion) in a blockbuster IPO, Bloomberg News reported.

That marked China's biggest ever mainland tech share sale -- beating the 46.3 billion yuan raised by Semiconductor Manufacturing International Corp (SMIC) in 2020.

Advanced memory chips are in huge demand for their key role in AI servers, alongside other powerful data-crunching semiconductors made by the likes of Nvidia.

That has created a major shortage of the less flashy DRAM chips used in laptops, phones and other electronics, pushing up prices.

US giant Apple, feeling the pinch of shortages, is reportedly testing CXMT's DRAM chips for use in its products.

CXMT is on the Pentagon's list of Chinese companies with alleged military ties, although that does not prohibit US firms from doing deals with them.

"Broadly speaking", CXMT is a viable challenger to the top three memory chipmakers, said Ellie Wang, an analyst at Taiwan-based market intelligence firm TrendForce.

"As customers diversify their supplier base amid the shortage, CXMT should gain further opportunities", she told AFP.

Although the IPO should support CXMT's long-term capacity investments, "it is unlikely to ease the current shortage immediately," as such expansion typically takes around a year or longer, Wang added.

CXMT is not the only memory chipmaker whose shares have benefited massively from the AI boom.

This month, SK hynix soared 13 percent on its first day of trading on Wall Street, capping one of the world's biggest ever stock sales.

Its market capitalisation on Seoul's Kospi index soared past $1 trillion in May.

That milestone was also recently hit by Samsung Electronics and US chipmaker Micron -- with AI thrusting the three memory chip firms into a previously exclusive club of around a dozen companies, nearly all American.

J.Sauter--VB