Demand for AI: Chinese chipmaker CXMT shares surge 500% in IPO
High demand for AI chips has crowned another winner. Shares of Chinese chipmaker CXMT surged nearly 500% on their first day of trading in Shanghai, reaching a market valuation of $539 billion.
High demand for AI chips has crowned another winner. Shares of the Chinese chipmaker CXMT surged by nearly 500% on their first day of trading in Shanghai, making it the highest-valued public company in China. The stock traded at a price of 49.50 yuan ($7.30), compared to the IPO price of 8.66 yuan. Consequently, the company's market value climbed to $539 billion. For comparison, the value of tech giant Tencent stands at $514 billion.
"We knew it would be a big IPO," analyst Tilly Zhang of Gavekal Dragonomics in Beijing told the Financial Times. "And yet, we were surprised by the great enthusiasm of the people."
CXMT is the fourth-largest manufacturer of DRAM—the chips used in devices such as servers and cameras—after SK Hynix, Samsung, and Micron. It has benefited from the global chip shortage following the massive demand for AI and focuses primarily on selling more affordable chips used in household appliances.
"Its focus is on products like personal computers and household appliances because the leading manufacturers are focused on more complex chips," added Zhang. The successful IPO of CXMT took place two weeks after the Korean chipmaker SK Hynix raised more than $26 billion in an IPO in the US.
The Chinese company intends to use the capital it is raising to expand production as well as research and development activities for memory chips. The company became profitable this year and reported a profit of $4.9 billion for the first quarter, compared to losses of about $10 billion accumulated over a decade. CXMT was founded in 2016 by Zhu Yiming, who currently serves as chairman.
