China’s largest memory chipmaker secured robust interest from institutions for its US$8.6 billion IPO, though demand cooled compared to some other recent large listings as investors pulled back in the face of a global selloff of chip shares.
Chinese memory chip manufacturer CXMT Corp. received strong interest from institutional investors for its mega initial public offering (IPO), although demand softened compared with other recent blockbusters as investors adopted a cautious stance amidst a rout in global semiconductor shares.
The offer was more than 570 times oversubscribed by institutions, which include mutual funds, pension funds and insurers. They bid for around 1.24 trillion shares out of 2.17 billion available to institutions in the IPO. That is less than many recent high-flying tech listings on Shanghai’s STAR Market, which saw subscription demand from institutions at more than 5000 times, Reuters reported. The muted enthusiasm for CXMT’s deal underscores concerns of overheated valuations, which have led to a steep selloff in chip shares in recent weeks, fueled by signs the recent frenzy for AI technologies may be sputtering.
Shanghai’s STAR Market is down some 25 per cent from its July 1 peak, losing over US$590.32 billion in market value.
CXMT’s retail tranche was also 243.93 times oversubscribed. The company is the fourth largest global producer of dynamic random access memory (DRAM) chips, after Samsung Electronics, SK Hynix and Micron Technology, according to the report.
CXMT plans to list on Shanghai’s STAR Market on July 27th, sources familiar with the matter told Reuters, although the company has not officially confirmed the listing date.
The ongoing AI boom will still continue to boost demand for DRAM chips, which are utilized in smartphones, laptops and servers. However, investors are growing increasingly risk-averse, despite the long-term prospects for the memory chip industry, according to the report.
