Institutional demand for CXMT’s $8.6 billion Shanghai IPO dented by chip stock selloff

SHANGHAI/BEIJING, July 19 (Reuters) – Chinese chipmaker CXMT Corp’s $8.6 billion initial public offering was more than 500 times oversubscribed by institutional investors, according to a filing on Sunday, but the demand ​was less feverish than in recent Chinese tech IPOs, reflecting ‌caution amid a global selloff in chip stocks.

Attention will now shift to CXMT’s listing expected later this month on Shanghai’s STAR Market, which will test the market ahead of a slew of other high-profile IPOs as Beijing pushes for self-sufficiency ‌in ​its tech rivalry with Washington.

In a statement on ⁠Sunday, CXMT, China’s top ⁠memory chipmaker, said institutional investors including mutual funds, pension funds and insurers subscribed for a total of 1.24 trillion shares, compared with 2.17 billion IPO shares on offer to them.

That translates into an ​oversubscription ratio of roughly 570 times. The multiple points to solid demand, but is much smaller than in recent STAR Market IPOs.

For ⁠example, public sale shares by Zhuhai Trinomab ⁠Pharmaceutical Co, Chongqing Genori Technology Co, and Wuhan Changjin ​Photonics were all over 5,000 times oversubscribed by institutional investors.

CXMT’s IPO, Asia’s biggest ​so far this year, comes amid a brutal sell-off in ‌once high-flying chip stocks as investors from Seoul to Silicon Valley start asking whether the AI boom became over-leveraged and got ahead of itself.

In China, the STAR Market, home to many leading chip stocks, has ⁠plunged roughly 25% from its July 1 peak, wiping out over 4 trillion yuan ($590.32 billion) of market value.

Sunday’s announcement came days after CXMT said the ⁠retail portion of ‌its IPO was 243.93 times oversubscribed, also pointing ⁠to less investor fervour.

CXMT, the world’s fourth-biggest DRAM chipmaker ​after ‌Samsung, SK Hynix and Micron Technology, has not disclosed ​when it ⁠will list on the STAR Market. Sources told Reuters the stock will debut on July 27.

The AI boom has boosted demand for DRAM, or dynamic random-access memory chips, which are used in smartphones, computers, servers and other electronics.…Read more by Thomson Reuters