Chinese memory chipmaker CXMT Corp's $8.6 billion initial public offering was more than 500 times oversubscribed by institutional investors, underscoring robust demand even as a global selloff in semiconductor stocks tempers investor enthusiasm. The response, while strong, was notably weaker than recent Chinese technology listings.
According to a company filing released on Sunday, institutional investors, including mutual funds, pension funds and insurance firms, subscribed for 1.24 trillion shares against 2.17 billion shares allocated to them in the offering. This resulted in an oversubscription ratio of about 570 times.
Although the demand highlights continued investor interest in China's semiconductor sector, the oversubscription was significantly lower than that seen in several recent IPOs on Shanghai's STAR Market. Reuters reported that offerings by Zhuhai Trinomab Pharmaceutical, Chongqing Genori Technology and Wuhan Changjin Photonics each attracted institutional subscriptions exceeding 5,000 times the shares on offer.
The focus will now shift to CXMT's expected debut on Shanghai's STAR Market later this month, which is likely to serve as an important gauge of investor appetite ahead of several other high-profile technology listings. The IPO comes as Beijing continues to encourage domestic semiconductor development as part of its broader strategy to reduce dependence on foreign technology amid ongoing competition with the United States, Reuters reported.
The listing also arrives during a difficult period for global chip stocks. Semiconductor companies that had benefited from the artificial intelligence boom have come under pressure as investors reassess valuations and growth expectations.
In China, the STAR Market, which hosts many of the country's leading semiconductor companies, has declined about 25% from its July 1 peak, erasing more than 4 trillion yuan (approximately $590 billion) in market value, according to Reuters.
Earlier this week, CXMT disclosed that the retail portion of its IPO was oversubscribed by 243.93 times, indicating that individual investor demand was also solid but below the levels seen in some recent technology offerings.
CXMT is the world's fourth-largest producer of DRAM (dynamic random-access memory) chips, behind Samsung Electronics, SK Hynix and Micron Technology. DRAM chips are widely used in smartphones, personal computers, servers and a range of other electronic devices, with demand receiving a significant boost from the rapid expansion of AI applications.
While the company has not officially announced its listing date, sources familiar with the matter told Reuters that trading is expected to begin on July 27. The performance of the shares after listing will be closely watched as a barometer of investor confidence in China's semiconductor industry amid heightened market volatility.
