By Yantoultra Ngui and Samuel Shen
SINGAPORE/SHANGHAI, July 27 (Reuters) - Shares of CXMT Corp are set to start trading in Shanghai on Monday after Asia's biggest IPO this year, putting the Chinese chipmaker's $85.5 billion market value and likely heavy turnover in focus after a sharp pullback in tech shares.
The debut will give investors a gauge of how much they are willing to pay for a marquee Chinese chip firm, as local markets navigate volatility following an AI-led selloff, and money rotates between
high-growth technology names and safer sectors.
CXMT, formally ChangXin Memory Technologies, raised 57.92 billion yuan ($8.6 billion) by selling shares at 8.66 yuan each, its listing documents showed. Proceeds could rise to 66.61 billion yuan if an over-allotment option is fully used.
At the IPO price, CXMT is valued at about 579 billion yuan ($85.5 billion) before the possible exercise of the over-allotment option, making it one of China's largest listed semiconductor companies.
Only 6.73% of CXMT's enlarged share capital will be freely tradable at listing, as most shares are locked up. The small initial float could magnify price swings and attract strong turnover.
HSBC Qianhai Securities said in a note last week that the offering could drain liquidity from the wider Chinese market before and on its debut, though past technology listings suggested a rebound could follow the next trading day.
BIGGEST EVER
CXMT makes DRAM chips, a type of memory chip used in phones, computers and servers. It is the world's fourth-largest DRAM maker after Samsung Electronics, SK Hynix and Micron Technology.
The company's IPO is the biggest mainland Chinese semiconductor offering on record, surpassing SMIC's $7.5 billion Shanghai share sale in 2020.
Morningstar analyst Jing Jie Yu wrote in a report on Friday that CXMT was well-placed to benefit from rising domestic AI demand, but its technology gap with global leaders could limit its share of the market for memory chips used in AI systems.
Its debut comes after Shanghai's tech-focused STAR 50 Index edged down 0.1% on Friday, while the broader Chinese and Hong Kong markets fell as higher oil prices amid renewed Iran war concerns hurt risk appetite.
CXMT said in its prospectus that AI demand helped drive the latest DRAM upswing, but said the market could weaken if AI investment slowed or rivals added too much supply.
The company expects first-half revenue to rise more than sevenfold to 110 billion yuan to 120 billion yuan. It expects net profit of 66 billion yuan to 75 billion yuan, reversing a year-earlier loss.
($1 = 6.7755 Chinese yuan renminbi)
(Reporting by Yantoultra Ngui in Singapore and Yiming Shen in Shanghai; Editing by Sumeet Chatterjee and Jamie Freed)
