Shares of Chinese memory chipmaker CXMT soared nearly 500% in their Shanghai stock market debut on July 27, as strong investor demand underscored growing optimism over the booming artificial intelligence semiconductor sector.


The stock opened at 49.50 yuan ($7.30) per share, up sharply from its initial public offering price of 8.66 yuan ($1.28), lifting the company's market capitalisation to about 3.1 trillion yuan ($458 billion), Caliber.Az reports, citing The Financial Times.


The surge made CXMT the most valuable listed company in mainland China and the country's second-most valuable publicly traded company after Hong Kong-listed Tencent.


"We knew it was going to be a big IPO," said Tilly Zhang, a technology and industrial policy analyst at Gavekal Dragonomics in Beijing. "Still, it's surprising how people have been so enthusiastic."


CXMT is the world's fourth-largest producer of DRAM memory chips, trailing only SK Hynix, Samsung Electronics and Micron. The company has benefited from a global shortage of memory chips driven by rapidly growing demand for artificial intelligence applications.


The company sold 6.688 billion shares in its initial public offering, raising 57.9 billion yuan ($8.5 billion), making it mainland China's largest IPO since Agricultural Bank of China's listing in 2010. If an overallotment option for an additional 1 billion shares is exercised, total proceeds could approach $10 billion.


The fresh capital will be used to expand production capacity and accelerate research and development of DRAM memory chips.


CXMT returned to profitability this year, reporting first-quarter earnings of 33 billion yuan ($4.9 billion), reversing cumulative losses of 37 billion yuan over the previous decade.


According to Zhang, the company's current profits are largely generated from lower-end memory chips used in consumer electronics.


"It's focused on consumer products like PCs and home appliances because the leading chipmakers are focusing on [high-bandwidth memory] chips."


CXMT is also developing high-bandwidth memory (HBM) chips for AI data centres, although it remains behind global competitors after U.S. export controls restricted its access to advanced chipmaking equipment supplied by Dutch company ASML.


"It's not mass-producing" such chips yet, Zhang added.


The company's rapid growth is viewed as a milestone in Beijing's efforts to build a self-sufficient domestic semiconductor industry. CXMT has received substantial support from local authorities in Hefei, including financing, low-cost land and assistance in attracting suppliers to establish operations near its manufacturing base.


By Bakhtiyar Abbasov