CXMT’s blockbuster IPO will test whether China’s memory makers are ready for the spotlight: ‘It does not yet mean China is broadly catching up’
Experts say shortages are forcing companies to explore Chinese chip supplies, yet adoption is still likely to be selective and politically contested.
Chinese semiconductor firm ChangXin Memory Technologies, popularly known as CXMT, witnessed a staggering 500% surge in its shares during its debut on the Shanghai stock exchange last Monday. By the end of the week, its market value reached an impressive 3.54 trillion yuan ($523 billion), dethroning the Industrial and Commercial Bank of China as the country's most valuable company.
However, industry experts are divided on whether CXMT's meteoric rise is a fleeting AI-driven memory shortage boost or a long-term trend in global AI supply chains where Chinese chipmakers are making their mark.
Barbora Valockova, a research fellow at Singapore's Lee Kuan Yew School of Public Policy, maintains that while China is gaining ground in memory chip production, the current surge is still fueled by AI demand and state-backed industrial policy. She emphasizes that the ascent is not a sign of China's complete catch-up to global chip leaders across the full stack.
Meanwhile, a group of U.S. lawmakers, including Jim Banks and Chuck Schumer, wrote to Apple CEO Tim Cook on July 30, urging the company to refrain from purchasing chips from Chinese suppliers like CXMT and Yangtze Memory Technologies Co. (YMTC), citing concerns about security and military ties. Apple CEO Tim Cook acknowledged the memory shortage but stated that Apple is currently experiencing a "100-year flood" of memory price increases.
While some industry analysts, like Kong Tuan Yuen from the East Asian Institute at the National University of Singapore, believe that the memory shortage will increase demand for Chinese chips and push firms to diversify their supply chains, most will likely continue using primary sources like SK Hynix, Micron, or Samsung chips due to the higher production costs associated with CXMT.
Despite the global chip market's initial reaction, where Nvidia's stocks dropped by 5% and other semiconductor firms plummeted, experts remain optimistic about the long-term prospects for Chinese chipmakers, citing factors such as China's vast capital markets, governmental support, and growing demand from foreign firms like Apple.
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