A company most Americans have never heard of just became the most valuable stock listed in China.
CXMT, a memory-chip maker founded a decade ago in the city of Hefei, went public in Shanghai and closed its first day of trading worth roughly $484 billion.
Meaning it became China’s largest public company on day 1…
If you read the headline and nothing else, it sounds like the memory shortage benefiting SK Hynix, Samsung and Micron… might be about to end.
But it actually changes nothing…
You see, every memory chip company in the world is racing along the same technology ladder… and CXMT is standing several rungs below the companies I've written to you about.
CXMT is currently testing a sample of a memory technology called HBM3, and hopes to begin trial production by the end of this year.
This is the same chip that SK Hynix started mass-producing 4 years ago.
And by the time CXMT gets HBM3 into production… SK Hynix and Samsung will likely be several generations further along…
(Samsung has already produced samples of HBM5)
It’s like a company still perfecting the iPhone 14 compeiting against Apple's iPhone 17.
That gap exists for a specific reason, and it isn't a lack of effort.
U.S. export controls prevent CXMT from buying the most advanced chip-making equipment made by Western companies.
So CXMT has had to improvise, using a technique called multi-patterning to squeeze more circuitry onto each wafer (the thin disc of silicon that chips are cut from)… since it can't access the newest machines that do this more efficiently.
This approach leads to more manufacturing errors and reduces yield… so the percentage of chips on each wafer that actually work and can be sold is fewer than the big 3.
But there’s another area that a lot of people are missing…
Even in a world where CXMT closes that technology gap entirely… it may not matter to SK Hynix, Samsung or Micron's Western customers.
Because CXMT's own production capacity currently falls short of demand within China itself!
The CCP has already instructed CXMT and other domestic chipmakers to prioritize local buyers over exports. This is because China wants to end its dependence on foreign memory chips.
So we still have the exact same issue as before… there simply isn't enough spare capacity sitting around.
So this "fourth competitor" idea, while technically correct… lacks the geographical context for it to be news worth acting on…
Because CXMT isn't yet positioned to take meaningful global market share away from the big 3… both because its technology trails by a full generation and because its own government has first claim on whatever it produces.
As always, I’m here to provide the signal and keep you away from the noise…
Oliver