Key facts
- CXMT Corp's $8.6 billion IPO was oversubscribed 570 times by institutional investors.
- This demand is less intense than seen in recent Chinese tech IPOs.
- The IPO occurs during a significant selloff in global chip stocks.
- Shanghai's STAR Market, where CXMT will list, has seen a 25% decline recently.
- CXMT is China's leading memory chip manufacturer.
Chinese chipmaker CXMT Corp's $8.6 billion initial public offering garnered significant interest, with institutional investors subscribing for 570 times the shares on offer. However, this demand is notably less fervent than in recent Chinese tech IPOs, reflecting investor caution amid a broader selloff in global chip stocks.
The company's upcoming listing on Shanghai's STAR Market is seen as a test for the market, especially as Beijing promotes technological self-sufficiency in its rivalry with Washington. CXMT, China's top memory chipmaker and the world's fourth-largest DRAM producer, announced that institutional investors, including mutual funds, pension funds, and insurers, subscribed for a total of 1.24 trillion shares.
While this oversubscription ratio indicates solid demand, it falls short of recent STAR Market IPOs, such as those for Zhuhai Trinomab Pharmaceutical Co, Chongqing Genori Technology Co, and Wuhan Changjin Photonics, which saw oversubscription ratios exceeding 5,000 times. CXMT's IPO, Asia's largest this year, coincides with a sharp decline in chip stocks globally, as investors question the sustainability of the AI boom's leverage.
In China, the STAR Market, which hosts many leading chip stocks, has experienced a significant downturn, plunging approximately 25% from its July 1 peak and erasing over 4 trillion yuan ($590.32 billion) in market value. The retail portion of CXMT's IPO also showed less enthusiasm, being oversubscribed 243.93 times.
CXMT's products, DRAM chips, are crucial for various electronics, including smartphones, servers, and computers, and have seen boosted demand from the AI boom. The company has not yet disclosed its listing date on the STAR Market, though sources suggest it could be July 27.