Chinese memory giant CXMT has overtaken Tencent Holdings as the most valuable public company in China, underlining the speculative frenzy around memory companies at the moment.
The chipmaker debuted on the Shanghai Stock Exchange on July 27, and its shares surged 467 percent on their first day of trading. CXMT’s market capitalization later reached $524 billion, according to Bloomberg.
CXMT’s market capitalization reached approximately $524 billion 17 days after its IPO, surpassing Tencent’s roughly $511 billion valuation. The crossover came as CXMT remained near its post-IPO valuation and Tencent shares declined following a sharp increase in the company’s AI infrastructure spending.
Strategically important position in China
While CXMT is the fourth largest memory manufacturer worldwide, it holds a strategically important position as the only one of the top four based in China. Foreign semiconductor and memory manufacturers are still able to do business in the country, but the escalating trade war between the US and China has forced some to limit sales of their most advanced chips, while others have been restricted by the Chinese government in favor of homegrown manufacturers.
In the event of China or the US imposing further restrictions on foreign memory chipmakers, CXMT would become the largest domestic supplier, with a near-monopoly position in China’s DRAM market, which supplies AI data centers and smartphones.
It is not just Chinese companies interested in CXMT either, with Apple reportedly testing the company’s DRAM for its MacBook and iPhone lines. Apple has, like the rest of the industry, suffered from the memory supply crunch, which has forced the iPhone maker to increase the prices of almost all of its hardware.
According to Counterpoint Research, Samsung is the leading manufacturer of DRAM with 39 percent market share, followed by SK Hynix and Micron with 29 percent and 25 percent, respectively. CXMT has seen its market share increase over the past few years, but it still accounts for less than 10 percent of the total.
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Data centers insatiable appetite for memory chips
Huge demand for memory chips has sent the stock prices of the major DRAM suppliers through the roof. SK Hynix, which was valued at $135 billion this time 12 months ago, surpassed a $1 trillion market cap in May, a huge increase for a company focused primarily on memory. Even Samsung, better known for its smartphones and TVs, is now seeing the majority of its revenue come from its memory chip and foundry businesses.
Data centers, especially those linked to AI training and operations, have a seemingly insatiable appetite for these chips, reshaping the entire consumer electronics market. Smartphone manufacturers, which were among memory chipmakers’ biggest customers a few years ago, are now struggling to secure favorable contracts for memory.
This has also affected the video gaming market, with Xbox, Sony, Nintendo, and Valve all having to either increase the price of their consoles or delay the launch of newer hardware. As AI infrastructure absorbs an ever-larger share of global memory supply, consumers are increasingly feeling the impact through higher prices and delayed product launches.