What just happened? Chinese memory maker CXMT is now the country's most valuable company after an impressive first day on the market that exceeded expectations. The stock's initial public offering price was set at CNY 8.66 but ended up closing at CNY 49.00 – a gain of nearly 466%.
CXMT, short for ChangXin Memory Technologies, is one of several major players in the memory market that are profiting from the ongoing AI boom. At present, CXMT ranks fourth overall with an eight percent share behind Samsung, SK Hynix, and Micron with shares of 36%, 29%, and 24%, respectively.
Larry Yang, chief economist of First Seafront Fund Management, told AFP that CXMT's first-day performance reflects investors' overwhelmingly bullish sentiment regarding the company.
The memory maker closed the successful day of trading with a market cap of around 3.65 trillion yuan, or roughly $540 billion. Fortune said it was mainland China's second largest IPO ever, following that of Agricultural Bank of China back in 2010.
Yang added that the newly raised money will give CXMT the ability to expand production capacity, in addition to boosting its global influence. Being able to tap a homegrown hardware maker should also benefit China in its AI race against the US.
CXMT was founded in 2016, just in time to leverage the pandemic-fueled PC buying surge. Then came the AI boom and as you can imagine, hardware makers and investors have been singing all the way to the bank. Consumers, meanwhile, have been met with soaring prices on smartphones, game consoles, and virtually everything else that relies on a memory chip to operate.
Worse yet, there appears to be no relief in sight. Earlier this month, SK Hynix said it expects the memory crunch to peak in 2027 and continue through at least 2030.
According to AFP, Apple is now testing DRAM chips from CXMT for use in future products. Signing on as a supplier for the Cupertino-based company is no doubt high on CXMT's list of short-term goals.