Shares in China’s biggest memory chipmaker surged more than 470 per cent on their first day of trading on the Shanghai Stock Exchange’s technology-focused Star Market, giving the company one of the most dramatic stock market debuts in recent years.
ChangXin Memory Technologies, known as CXMT, saw its market valuation rise to around 3.3 trillion yuan, or about $487.3 billion, making it the most valuable listed company on mainland China’s stock exchanges.
The spectacular debut came despite a broad sell-off in technology stocks around the world this month. Analysts said demand for CXMT shares greatly exceeded the number available to investors, helping drive the sharp rise.
Only about 7 per cent of the company’s shares were available for trading on the first day, according to Anna Macdonald, investment strategy director at Hargreaves Lansdown.
CXMT produces dynamic random-access memory, or DRAM, chips used in artificial intelligence data centres, smartphones, personal computers, tablets and other electronic devices.
Founded in 2016 by chairman Zhu Yiming, the company is headquartered in Hefei in eastern China’s Anhui province. It plans to use most of the money raised through its initial public offering to expand memory chip production and fund research and development.
The strong market debut is expected to provide encouragement to Chinese financial officials, who have introduced measures aimed at supporting the stock market after a decline wiped out more than $1.5 trillion in value in recent weeks.
CXMT’s performance also reflects strong investor interest in Chinese technology companies as Beijing continues efforts to reduce the country’s reliance on foreign semiconductor suppliers.
South Korea’s Samsung Electronics and SK Hynix, along with US-based Micron Technology, currently dominate the global DRAM market. The three companies account for about 90 per cent of worldwide production.
CXMT is seeking to expand its position as China attempts to build a more self-sufficient semiconductor industry amid restrictions on access to advanced foreign technology and chipmaking equipment.
The company’s debut followed a major listing by SK Hynix in the United States earlier this month. The South Korean company raised $26.5 billion through a New York share offering, the largest listing by a foreign company in the US.
SK Hynix sold 177.9 million American depositary shares at $149 each. Its shares rose as much as 17 per cent during their first day on the Nasdaq before later giving back part of the gain.
The company, a major supplier to artificial intelligence chipmaker Nvidia, saw its market value exceed $1 trillion in South Korea in May as demand for AI-related semiconductors continued to grow.
The contrasting performances of CXMT and SK Hynix underline the growing investor focus on memory chipmakers, as the rapid expansion of artificial intelligence drives demand for semiconductor capacity worldwide.
