CXMT Corp’s sales jump 10-fold amid AI demand

CXMT Corp’s (長鑫存儲) first-half revenue leaped almost 10-fold while profit surged, reflecting a rush for artificial intelligence (AI) hardware that has made the memorychip maker China’s most valuable business.

The Hefei-based company’s revenue expanded to 150.3 billion yuan (US$22.4 billion) in the first six months, more than double the sales it raked in across all of last year.

It posted a profit of 77.6 billion yuan, compared with a loss a year earlier.

CXMT Corp signage is pictured at a plant in Beijing on Aug. 21.

Photo: Bloomberg

The impressive earnings emerged a month after CXMT pulled off China’s second-biggest initial public offering (IPO) in Shanghai, raising 66.6 billion yuan with an overallotment option.

The company is the world’s fourth-biggest maker of DRAM, and it is seen demand and prices for its products skyrocket with the advent of AI and the hardware-hungry data centers used to power it.

CXMT’s stock has continued to rise since its debut and the company has now overtaken Tencent Holdings Ltd (騰訊) to become China’s largest by market capitalization, marking a paradigm shift in the country’s tech landscape.

Even so, the chipmaker trades at a significant discount to global peers, according to Goldman Sachs, which calculates its valuation at about 10 times estimated earnings for next year.

That multiple is based on forecasts for net income to more than double to 361 billion yuan next year from an estimated 161 billion yuan this year.

The results show sharp growth acceleration for the Chinese memorychip maker that had until recently incurred hefty losses competing in a market for commodity products.

CXMT benefits from the same acute shortage of memory that is fired up the valuations of Samsung Electronics Co, SK Hynix Inc and Micron Technology Inc.

All of those companies are prioritizing the production of high-end memory required to make AI accelerators by the likes of Nvidia Corp.

As China’s best alternative to those international suppliers, CXMT has become a symbol of the country’s effort to reduce reliance on foreign technology.

Founded by US-trained chip veteran Zhu Yiming (朱一明), CXMT is also working on developing its own high-bandwidth memory, the advanced class of semiconductor used in AI accelerators.

The company has said it will use the IPO proceeds to fund capacity expansion and try catch up with larger rivals.

In a sign of CXMT’s growing clout, Apple Inc is said to be in talks to purchase its memory chips, alongside fellow Chinese supplier Yangtze Memory Technologies Co (長江存儲).

That would be for use in Apple devices sold in China, Bloomberg News reported last month.

The discussions have raised alarms in Washington, with a group of US senators urging Apple to drop its attempt to rely on Chinese suppliers.