CXMT Debut Spurs Split Views as China’s Most Valuable Stock: ‘Tech Gap’ or Memory Champion?

CXMT takes aim at Samsung and SK Hynix as investors debate whether it is a next-generation contender or a bubble

Nomura sees 18% DRAM share; Morningstar says the stock is overvalued without EUV

Investors are divided over ChangXin Memory Technologies Inc., or CXMT, China’s biggest DRAM maker, after its July 27 debut on Shanghai’s Star Market, the technology board often called China’s Nasdaq. Nomura Securities expects the company to gain global DRAM market share as memory shortages persist and artificial intelligence demand rises. Morningstar, by contrast, argues that a clear technology gap remains because the company lacks extreme ultraviolet, or EUV, lithography tools.

CXMT becomes China’s most valuable listed company

CXMT jumped as much as 535% to 55.03 yuan shortly after trading opened, from its IPO price of 8.66 yuan, making it the most valuable listed company on mainland Chinese exchanges, Bloomberg reported. The company’s July 14 bookbuilding drew 11,537 investor accounts and was oversubscribed 462.85 times. The final offer price was about double the market expectation of 4.4 yuan.

The company raised 57.9 billion yuan, about $8.1 billion, by selling 6.688 billion new shares at 8.66 yuan apiece. Including an over-allotment option, the share sale could increase to 7.69 billion shares, lifting proceeds to 66.61 billion yuan, or about $9.3 billion.

The listing was Asia’s largest IPO this year and the biggest ever by a Chinese semiconductor company, surpassing Semiconductor Manufacturing International Corp.’s $7.5 billion offering in 2020. It was also the second-largest IPO on mainland China’s stock market since Agricultural Bank of China’s $10 billion listing in 2010.

CXMT’s customers include Lenovo Group Ltd., Huawei Technologies Co. and Alibaba Group Holding Ltd. US sanctions have left Chinese companies with little choice but to use more CXMT memory. With DRAM prices soaring, Apple Inc. is also considering adopting CXMT memory for products including iPhones and iPads to trim component costs, despite previously steering clear of the supplier.

The area drawing the closest scrutiny from South Korean investors is high-bandwidth memory, or HBM. CXMT is challenging Samsung Electronics Co. and SK Hynix Inc. in a market the two companies dominate, attracting the attention of global technology firms. Industry estimates indicate CXMT will devote 20% of its DRAM-production wafers this year to HBM3, the fourth generation of HBM. In earlier HBM generations, the technology gap between South Korean rivals and CXMT was estimated at about four years. In HBM3, people in the industry now view that gap as having narrowed to less than three years.

A packaging facility under construction in Shanghai is also intended for mass HBM production, according to industry accounts. CXMT has said it began supplying HBM3 samples in the second half of last year to Chinese AI chip designers including Huawei, and it has set a goal of mass-producing HBM3E by 2027. Early problems with yields and reliability are considered highly likely. Even so, there is broad agreement that the effort itself could become a threat, much as CXMT’s earlier push into DDR4 did.

Split outlooks on whether CXMT can reshape DRAM

CXMT’s technological ambitions helped turn its IPO into a blockbuster, but views on the company’s valuation remain sharply divided.

Nomura analyst Donnie Teng rates CXMT a buy and set a target price of 116 yuan, or 1,239% above the IPO price. He said the target was based on applying a price-to-earnings ratio of 20 times projected earnings per share for fiscal 2028.

Teng also wrote that CXMT could trade at roughly twice Micron Technology Inc.’s valuation multiple. With global memory supply unlikely to loosen anytime soon, CXMT’s market-share gains should accelerate.

He also projects global memory consumption will increase more than sevenfold by 2030 as AI agents fuel demand. On that basis, CXMT’s memory shipments would rise 40% to 45% annually through 2030, while its global DRAM market share would expand from about 10% now to 18% by the end of 2028.

Morningstar analyst Wei Jingjie is far more cautious. He set fair value at 14.90 yuan a share, 72.1% above the IPO price but still far below the current market price. Without access to EUV lithography equipment, CXMT will struggle to narrow its technology gap, he said, and the valuation discount tied to that gap should persist for the time being.

Given CXMT’s weaker technology, its DRAM will likely sell at lower prices than those of pure-play memory rivals, and its valuation multiple will remain clearly lower, Wei added. Bloomberg noted that the gap between those views underscores how sharply the market is split over CXMT’s growth prospects, even as the company emerges as a threat to Samsung Electronics, SK Hynix and Micron.

Even so, long-term growth expectations still dominate among many market professionals. They expect steady buying to support the stock even if sentiment toward the broader semiconductor sector worsens.

Zeng Zhiqing, a fund manager at Beijing Nuohua Investment Management, told Bloomberg that unlike previous mega-IPOs, CXMT has not yet reached its limits in either technology or market share. That leaves considerable room for future growth.

Theodore Xu, chief executive officer of Eee Capital, told CNBC that he has little doubt CXMT will grow into a global industry leader. In memory semiconductors, the company is more than a catch-up player and can establish itself as a global champion, he said. The only question is when.

Kang Kyung-ju, Hankyung.com reporter, qurasoha@hankyung.com