Chinese investors seeking shares in CXMT's $8.6 billion IPO are betting the chipmaker's valuation will soar as much as 10-fold after its Shanghai debut on the back of an AI-led upcycle and Beijing's ambition to be technologically self-sufficient. The share offering by CXMT, or ChangXin Memory Technologies, will be Asia's biggest share sale so far this year.
Who Gets to Play the Lottery
Wu Zhou, a fund manager at Shenzhen Deyuan Investment, said he will bid for new CXMT shares, betting that China's top memory chipmaker will one day take market share from global giants like South Korea's Samsung Electronics and SK Hynix. Wu said, "CXMT's valuation will likely top 3 trillion yuan ($443.33 billion) after listing ... and could even hit 5 trillion yuan," adding that whoever wins the lottery part of the IPO subscription will make money. That compares with an IPO valuation of 579.18 billion yuan after the company on Tuesday priced its offering at 8.66 yuan a share. The lottery system matters here. China uses it to allocate new stock, which is in short supply, and Shanghai-based investor Chen Zhi said, "I will surely subscribe for CXMT shares. It's a no-brainer," adding that the chances of winning the shares are slim.
The IPO will be open for subscription by retail and institutional investors for just one day on Thursday. Its listing in Shanghai is set for July 27, according to sources familiar with the matter. They declined to be named publicly because they are not authorised to speak to the media. CXMT, which did not respond to Reuters' requests for comment, has yet to officially disclose its debut schedule.
Capital for the Strategic Industries
CXMT's public offering, China's biggest by a chipmaker, represents Beijing's latest effort to channel capital into strategic industries crucial to its rivalry with Washington. The company, which was designated as a Chinese military company by the U.S. Department of Defense under the Biden administration, has said it plans to use the IPO's proceeds to upgrade production lines and technologies. That is the machinery of state power in plain view: capital steered toward the sectors that serve national competition, while ordinary investors are told to scramble for a lottery ticket.
Wu believes that CXMT, China's biggest maker of dynamic random-access memory chips used to power smartphones, servers, computers and other electronics, "will become a global giant" after a capacity expansion that rides on an AI-driven super-cycle. Eddie Tam, chief investment officer at Hong Kong's Central Asset Investments, said, "If you look at Micron, Samsung and SK Hynix, they are all trillion-dollar-class companies despite the recent volatility." Tam said CXMT's IPO valuation looks very cheap even with China's two- to four-year lag behind top industry players in DRAM and high-bandwidth memory technologies. He expects CXMT's shares to "surge several-fold" on their first day of trading.
Yao Kai, a fund manager at Shanghai Zhuangyan Private Fund Management, said he will also bid for CXMT's shares "to try luck," but is worried that the listing could knock down other tech stocks. That worry sits right beside the hype. One offering can lift a favored company and rattle the rest of the market, because the whole setup runs on speculation, scarcity, and the state-backed chase for strategic advantage.
If an over-allotment option for the IPO is fully exercised, gross proceeds would rise to about 66.6 billion yuan, according to a filing on Tuesday. In a statement on Wednesday, CXMT said the IPO price valued the company at over 300 times its 2025 earnings and roughly 5 times its book value. Some investors wonder whether the semiconductor space has become overbought and if AI spending by hyperscalers can continue at its current pace, while others brush aside concerns of lofty valuations, citing booming demand for memory chips.
The Winners and the Bottom Rung
For now, investors are placing their faith in a strong outlook for CXMT's earnings growth. CXMT's first-quarter revenue hit 50.8 billion yuan, up 700% from a year earlier, while it recorded a net profit of 25 billion yuan, swinging from a year-earlier loss of 1.6 billion yuan, according to its prospectus. Fund manager Wu expects CXMT's profit to reach 100 billion yuan this year. Those numbers feed the frenzy. They also show how the gains at the top are measured in billions while access to the shares themselves is rationed through a lottery.
China's top contract chipmaker, Semiconductor Manufacturing International Corp, was listed in Shanghai in July 2020 and the stock almost halved from its debut price in a bit more than two months. That history hangs over the new offering, even as investors rush in. The exchange rate used was $1 = 6.7670 Chinese yuan renminbi.