Chinese memory chip company Changxin Memory Technologies (CXMT) experienced a dramatic surge on its first day of trading. However, concerns about a potential bubble and the competitive landscape in the AI memory market have emerged among domestic online investors.
On July 27, CXMT's shares skyrocketed by over 500% compared to its initial public offering price during trading on the Chinese stock market. This surge propelled its market capitalization to the top position on the Chinese exchange.
As a leading DRAM semiconductor manufacturer in China, CXMT has grown with significant support from the Chinese government amid U.S. semiconductor regulations. The company is also pushing into the AI server memory and high-bandwidth memory (HBM) markets.
Market analysts suggest that the surge may be linked to Apple's consideration of using Chinese-made memory in some of its products. Reports indicate that Apple is exploring the expansion of its use of Chinese memory, which has drawn strong opposition from U.S. memory manufacturer Micron.
Despite these optimistic projections, there is a prevailing negative sentiment regarding the company's actual business competitiveness and valuation. Online commenters expressed skepticism, stating, "The price of CXMT shares is truly a bubble. They are neither cheap nor in high demand, and the quality is not impressive," and "The biggest boon for stocks is not performance but expectations. How will they manage if it rises so much? It seems overly inflated due to the Apple issue."
Additionally, as foreign investors continue to sell off shares in the domestic market, speculation has arisen that foreign capital may be shifting towards Chinese semiconductor stocks.
However, it remains uncertain whether CXMT's first-day surge will translate into long-term corporate value. The semiconductor industry notes that CXMT still lags behind Samsung Electronics, SK Hynix, and Micron in terms of global market share and technological capabilities, suggesting that the current stock price reflects significant growth expectations.
Currently, the global DRAM market is dominated by three companies: Samsung Electronics, SK Hynix, and Micron, which together hold over 90% of the market share, with Samsung at approximately 40%, SK Hynix at around 35%, and Micron at about 20%. In contrast, CXMT's global market share is estimated to be in the single digits, positioning it as a potential fourth player.
There is still a considerable technological gap. SK Hynix holds a near-monopoly in the HBM market, a key component for AI semiconductors, supplying HBM3E to global AI companies, including NVIDIA. While Samsung is considered a latecomer in the HBM sector, it maintains top-tier competitiveness in DRAM manufacturing technology and production capacity. Conversely, CXMT, despite rapid growth backed by substantial government support, struggles to catch up with Samsung and SK Hynix in advanced process technology, HBM mass production experience, and global customer trust. The U.S. export restrictions on semiconductor equipment also hinder its access to cutting-edge EUV technology, making it challenging to close the technological gap in the short term.
Looking ahead, the outlook is divided between the domestic Chinese market and the global market. With the Chinese government strongly promoting semiconductor localization, CXMT is likely to steadily increase its market share within China. However, it faces significant challenges in the global AI memory market, which is currently led by major tech companies like NVIDIA, AMD, Microsoft, and Amazon, who rely on HBM supply chains dominated by SK Hynix and Samsung.
The stock price is expected to reflect both these expectations and realities. While CXMT's shares surged over 500% on their debut, indicating high market expectations, there is a risk of high volatility if actual performance and technological capabilities do not support this valuation. Conversely, if government support and domestic market expansion continue, the company could maintain a high valuation. SK Hynix is expected to benefit the most in the long term if demand for AI memory continues to grow, but short-term profit-taking and valuation pressures are potential variables. The recovery of Samsung's HBM competitiveness will be a key factor for its future stock price.
In summary, while CXMT has the potential for rapid growth in the Chinese market, industry assessments suggest it is not yet positioned to threaten Samsung Electronics and SK Hynix in the global market in the short term. However, ongoing investment from the Chinese government and advancements in AI memory technology could allow it to emerge as a new competitor in the global memory market in the long run.
* This article has been translated by AI.
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