Chinese memory chip manufacturer CXMT Corp. could become the most valuable listed company in mainland China shortly after its Shanghai debut, following an extremely oversubscribed initial public offering (IPO) worth 66.6 billion yuan ($9.8 billion), according to Bloomberg.
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CXMT sold 6.688 billion shares at 8.66 yuan each, with a potential greenshoe option for additional placement. This marks the second-largest domestic IPO in China, trailing only behind Agricultural Bank of China’s roughly $10 billion listing in 2010.
The share price values CXMT at approximately 580 billion yuan prior to trading. A first-day surge of around 330% would lift its market capitalization above Industrial and Commercial Bank of China’s 2.6 trillion yuan, making CXMT the largest firm traded on the mainland.
In the initial five trading sessions, newly listed shares are exempt from daily price fluctuation limits, allowing for substantial early movement.
Demand was fueled by retail investors, with the retail tranche oversubscribed by 212 times. Roughly 9.4 million bids were placed for shares worth 7.07 trillion yuan.
The company’s IPO valuation also fuels expectations. CXMT was priced at about 2.4 times its book value, which is 56% lower than the average for global DRAM manufacturers such as SK Hynix Inc (KS:000660), Micron Technology Inc, and Nanya Technology Corp.
CXMT ranks as the world’s fourth-largest producer of dynamic random-access memory (DRAM), used in smartphones, computers, and artificial intelligence servers. The Hefei-based firm is also developing high-bandwidth memory (HBM), a critical component in AI data centers.
Its listing gives investors direct exposure to Beijing’s push to expand domestic semiconductor production and reduce reliance on foreign chip suppliers.
Chinese IPOs tied to artificial intelligence have seen significant first-day gains over the past year. Semiconductor testing firm Semight Instruments soared 876% on its April debut, while chip developer Moore Threads gained 425% in December.
CXMT may qualify for the Stock Connect program during the third-quarter review at the end of August, with potential inclusion by mid-September. This would grant qualified Hong Kong investors broader access to Shanghai-listed shares.
A strong market debut could bolster planned listings from Yangtze Memory Technologies, Baidu Inc (NASDAQ:BIDU)’s Kunlunxin chip unit, and other Chinese technology firms.
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