Shares of Chinese memory chip manufacturer CXMT surged sharply upon their stock market debut, making the company China’s largest by market capitalization. The record-breaking debut also demonstrated strong investor interest in semiconductor firms linked to artificial intelligence.
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Rocket growth propelled CXMT to the top of Chinese market
CXMT’s share price rose from an opening 8.66 yuan to 54.65 yuan during the first day of trading, an increase of more than 500 percent. As a result, the company’s market capitalization climbed to 3.65 trillion yuan, surpassing the previous Chinese leader Industrial and Commercial Bank of China.
The company raised 57.92 billion yuan in its initial public offering, representing the largest IPO in Asia this year and the largest semiconductor offering in mainland China. The sharp surge was also supported by limited share availability, as only approximately 6.73 percent of all issued shares are freely tradable.
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Investors betting on Chinese chip self-sufficiency
CXMT has become an important part of China’s strategy focused on reducing dependence on foreign technologies. The company manufactures memory chips and its growth is intended to help China catch up with competitors in semiconductors and infrastructure for artificial intelligence. Its customers include technology company Huawei, among others.
However, the strong debut also raised concerns about a speculative bubble. Fund managers shifted capital from other Chinese chip stocks into CXMT, causing a decline in some competitors. The company expects to increase revenue for the first half of the year more than sevenfold to 110 to 120 billion yuan and return to profit of 66 to 75 billion yuan after last year’s loss.
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Source: ÄŒTK
