How to Invest in CXMT, the Chinese DRAM Company -- and Why You Might Not Want To
CXMT sounds like it should be the ticker for a Chinese Nasdaq memory stock, but it's not. Why is it so hard to invest in this company?
Artificial intelligence demands memory chips, prompting a surge in demand for DRAM stock. However, investing in CXMT, a Chinese memory company, may not be the best choice. CXMT's market share has fluctuated, currently sitting at 9%, down from 10% a year ago. This decline is attributed to competitors like Samsung, SK Hynix, and Micron, who are expanding their DRAM production and targeting high-bandwidth memory chips for data centers.
CXMT struggles to compete in this arena, as its chips are not yet ready for prime time and its customer base is limited to Chinese companies that use cheaper DRAM. Given these challenges, it might be wiser to invest in more established players like Micron, which has a lower forward earnings ratio.
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