CXMT Shares Close 1.4 Percent Lower at 54.79 Yuan as China's DRAM Champion Presses a $5.2 Billion Buildout

SHANGHAI — CXMT Corp. shares eased 1.4 percent in the last session before China's National Day break, a quiet close for a memory-chip maker whose listing is still priced far above its offering and whose expansion plans now sit at the center of the trade.

The stock finished Wednesday, Sept. 30, at 54.79 yuan, down 0.76 yuan, or 1.37 percent, on the Shanghai STAR Market under ticker 688825. It had risen 3.25 percent to 55.55 yuan the day before. The session range was about 54.38 to 55.85 yuan, with turnover near 6.4 billion yuan. Shanghai was shut from Oct. 1 for the holiday, so Wednesday's print is the latest official close.

The dip did not change the distance from the deal price. CXMT sold shares at 8.66 yuan and began trading on July 27. The stock jumped nearly 466 percent on debut, closing at 49 yuan, in Asia's largest initial public offering of the year. The company raised 57.92 billion yuan, about $8.6 billion. First-day volume of about 141 billion yuan set an A-share record. At the debut close, the implied value of the whole company was about 3.3 trillion yuan, briefly larger than Industrial and Commercial Bank of China on that arithmetic.

That arithmetic is the dispute around the stock. Total shares are on the order of 67 billion. Shares actually free to trade on day one were about 4.5 billion, roughly 6.7 percent of the company. Strategic holders, including the social-security fund, Alibaba and four insurers, are locked up for 12 to 36 months. A price set on a thin float, applied to the full share count, produced a market value that trading volume cannot support if the lockups ever hit the market together. By late September the shares had given back part of the debut spike and were sitting in the mid-50s, still several times the IPO price and below a 52-week high of 61.80 yuan.

The operating story is separate from the float. CXMT designs and makes DRAM for phones, personal computers, servers and cars, in DDR and low-power DDR lines, sold as wafers, chips and modules. On Sept. 20 the company said its fifth-generation platform, G5, had entered mass production. Reuters reported the process uses 11.95-nanometer feature spacing and turns out at least 50 percent more gross dies per wafer than the prior generation. Two 24-gigabit LPDDR5X parts, each holding 50 percent more data than the previous comparable products, are already in volume.

Vice President Luo Xiaodong said at the World Manufacturing Convention in Hefei that the company's "process capability" is now comparable to advanced mass-produced technologies in the industry. That is the claim investors are underwriting: a Chinese DRAM supplier that can ship current-generation mobile memory, not only older parts.

The spending attached to that claim is large. Reports citing Chosun said CXMT is directing 18 billion yuan toward research and backend testing. A separate account, citing the South China Morning Post, said the company plans to invest 34.9 billion yuan, about $5.2 billion, in capacity, with a large share expected to go to domestic equipment suppliers. Neither figure is a quarterly earnings beat. Both are multi-year bills that have to be paid whether memory prices hold or not.

Other reported moves widen the bet. People familiar with the plans told Reuters that CXMT is preparing to enter flash memory, a market led by Samsung and, in China, by YMTC. The Information reported in August that the company had begun small-volume production of high-bandwidth memory. CXMT and Xiaomi said the chipmaker will supply LPDDR6 for an upcoming Xiaomi folding phone. Each item is a customer or a product line, not revenue in the latest quarter.

Valuation is where the holiday close matters less than the structure. On trailing reported earnings the stock has been quoted at extremely high multiples, a function of listing at the top of a memory upcycle and of the thin float. On annualized first-half profit, some screens put the multiple in the single digits, which is the other side of the same argument: earnings have arrived, and the share count has not. Revenue over the trailing period has been cited near 197 billion yuan.

Wednesday's 1.4 percent decline was ordinary holiday positioning, not a verdict on G5. The stock remains a bet that China's largest DRAM maker can turn a debut, a locked-up register and a $5.2 billion buildout into share against Samsung, SK Hynix and Micron. Luo's comparison to advanced mass production is the sentence the next capacity ramp has to earn. Until the holiday ends and the float stays thin, the price will keep saying more about scarcity of shares than about scarcity of chips.