CXMT opens investor subscription on July 16, under the code 688825, seeking 29.5 billion yuan on the STAR Market. It is the largest A-share offering of 2026 and, by planned proceeds, the second-largest STAR Market listing ever, behind SMIC.
Run the obvious calculation and the stock looks like a gift. The company plans to raise 29.5 billion yuan for a stake of not less than 10 percent of its post-issue equity. Divide the one by the other and the planned raise implies a market capitalization near 295 billion yuan. Its own guidance puts first-half 2026 net profit attributable to the parent at 50 to 57 billion yuan. Annualize the midpoint and you get a company trading at under three times forward earnings.
Three times. For the national champion of Chinese memory, at the top of the sharpest memory upcycle the industry has produced.
That number is now circulating everywhere, and it is the reason Chinese market commentary is discussing a post-listing valuation of two to three trillion yuan.
It is also not a price.
The multiple everyone is quoting is a placeholder
CXMT’s book-build opens on July 13. The final offering price is published on July 15. Subscription is on the 16th. As of this writing, no investor has told anyone what CXMT is worth.
The 295 billion yuan figure is what you get when you divide a planned fundraise by a minimum float. Chinese coverage is precise about this and treats it as a floor. The share count is capped; the price floats with the book, and the raise floats with the price. Whatever the institutions bid, the capitalization moves with them. SMIC is the precedent that matters here: in 2020 it planned to raise 20 billion yuan on this same exchange and walked away with 53.2 billion.
So the honest version of the opening arithmetic is this. Under three times forward is not the market’s judgment of CXMT. It is the lower bound of a judgment that has not been made yet. The event is not the listing. The event is Wednesday.
And the exchange has built a tell into the process, which is worth reading carefully because it measures two different things. Under the terms of CXMT’s July 9 book-build announcement, the issuer and its underwriters must publish a special investment risk announcement before subscription opens if either of two conditions is met. The first is that the final price implies a P/E above the trailing one-month average for the industry published by China Securities Index Co. That tests whether the price is high against the sector. The second is that the final price exceeds the lower of two reference points drawn from the book itself: the median and weighted average of surviving offline bids after the highest are struck out, and the median and weighted average of the bids from public funds, the social security fund, pensions, annuities, insurance capital and qualified foreign investors.
Read the second condition again. It tests whether the underwriters priced the deal above where China’s longest-horizon institutional money was willing to go. That is not a valuation test. It is a test of who set the price, and it is the more informative of the two.
That document is either published on Wednesday or it is not. It is the cheapest possible read on what the A-share market decided memory is.
The control group priced itself six days ago
Before guessing what CXMT will fetch, look at what a competitive book-build just paid for the best asset in the category.
On July 10, SK Hynix listed American depositary receipts on the Nasdaq, pricing at 149 dollars and raising 26.5 billion dollars. The stock closed its first session at 168.01, valuing the company near 1.27 trillion dollars. Per FactSet, that puts the world’s HBM leader, holder of roughly 58 percent of the HBM market and the sole reason a large share of Nvidia’s accelerators function, at about 5.4 times forward earnings. Micron sits near 6.7 times forward, against roughly 22 times trailing.
These are the numbers being paid for companies whose results are, on every measure they themselves report, the strongest in their histories.
Micron’s fiscal third quarter delivered revenue of 41.5 billion dollars, up 346 percent year on year, with non-GAAP gross margin at 84.9 percent and non-GAAP earnings per share of 25.11 dollars against 1.91 a year earlier. That is a thirteenfold increase in twelve months, and management then guided the following quarter to 50 billion dollars of revenue and 31 dollars of EPS. SK Hynix posted first-quarter revenue of 52.6 trillion won, operating profit of 37.6 trillion won at a 72 percent operating margin, up 405 percent year on year, and net profit of 40.3 trillion won at a 77 percent net margin. All three incumbents crossed a trillion dollars of market value in May.
And then they fell. As of the second week of July, Micron, Samsung, SK Hynix and the Roundhill memory ETF are each more than 20 percent below recent closing highs. Semiconductor market value has contracted by roughly 1.5 trillion dollars since June 25 on Yahoo Finance’s basket, with Micron alone down close to 350 billion. The Kospi, where Samsung and SK Hynix now account for about half the index weight, triggered circuit breakers twice, on June 23 and again on July 2, the latter after Meta signalled it would resell surplus AI compute rather than keep absorbing it.
Note carefully what did not happen in those three weeks. DRAM contract prices did not fall. TrendForce’s June 30 update has them still rising on tight supply and low inventories. The drawdown happened anyway.
That is the lesson the memory industry has beaten into every investor who has ever touched it, arriving in real time. Peak-cycle earnings are not a base. They are a peak. A single-digit multiple on record earnings is not a market calling a company bad. It is a market saying the denominator is borrowed. The multiple compresses precisely because the earnings are inflated, and it starts compressing before the price series turns, because the market is pricing the turn rather than reporting it.
The incumbents’ cheap multiples are cheap because the fall has already been discounted. CXMT’s cheaper multiple is cheaper because nobody has discounted anything yet, because nobody has priced it at all.
What the incumbents are doing that CXMT is not
There is a serious counterargument to all of this, and it deserves its hearing before the argument continues.
Nomura’s position is that memory is short, not long: the big three are cannibalizing commodity DRAM capacity to feed HBM, which tightens DDR5 rather than loosening it, and the market is pricing a supply risk a decade early. UBS and Bank of America have both framed the July drawdown as a reset inside a supercycle rather than a break in it. The HBM bottleneck is widely expected to persist into 2027. Micron guided up, not down.
More important than any of that, Micron is doing something structural. It has signed sixteen multi-year strategic customer agreements with take-or-pay terms, covering roughly 20 percent of DRAM and 30 percent of NAND volume, and it puts the floor-price revenue under those agreements at about 100 billion dollars, or roughly a quarter of revenue over their term. That is a company converting cyclical earnings into contracted earnings. It is the most credible answer anyone in memory has ever given to the “it is just a cycle” objection.
CXMT has disclosed no equivalent. Its earnings are spot earnings. Hold that thought.
CXMT’s margin is a price, not a cost position
Now go back to the denominator and ask what is inside it.
CXMT earned its first annual profit in 2025, at 1.875 billion yuan attributable to the parent. Its guidance for the first half of 2026 alone is 50 to 57 billion. In six months, it is guiding to roughly thirty times what it earned in the whole of the prior year.
Nothing about the company improved by a factor of thirty in twelve months. The price of DRAM did.
And here is the number that settles what kind of profit this is. SemiAnalysis, reconciling the prospectus against its own memory model, finds CXMT’s cost per bit on DDR5 remains more than 30 percent above that of the three global incumbents, while its average selling price sits only 5 to 10 percent below theirs. It is not the low-cost producer and it is not undercutting anyone. It is a price-taker inside a shortage, and its gross margin of over 70 percent is the arithmetic output of that shortage rather than of any cost or technology advantage.
This distinction is the whole thing, and most coverage misses it. When Micron earns an 85 percent gross margin, that margin sits on top of the industry’s best cost structure, which means it survives a price decline longer than anyone else’s. When CXMT earns 70 percent on a cost base 30 percent worse than the leaders, the same price decline reaches it first. In a boom, a high-cost producer is indistinguishable from a low-cost one. In a bust, it is the first thing that stops working.
So the sub-three-times multiple is real arithmetic on a temporary denominator, computed off a price that does not yet exist.
The option the company declined to fund
There is a version of the bull case that survives everything above, and it deserves a fair hearing, because it is the case that would actually justify a franchise multiple.
If CXMT is not really a DRAM company but a future HBM company, then commodity DRAM earnings are merely the funding mechanism for something far more valuable, and pricing it on the DRAM cycle is a category error. Under that reading, a rich multiple is not exuberance. It is a call option on China’s compute independence, and cheap at almost any price.
That is a real argument. It has one problem, and the company put it in the prospectus.
Of the 29.5 billion yuan in net proceeds, 7.5 billion funds a wafer-manufacturing line upgrade and 13 billion funds DRAM technology upgrades, together 69.5 percent. The remaining 9 billion, or 30.5 percent, funds forward-looking DRAM research. There is no dedicated HBM project and no separate HBM funding line. SemiAnalysis, going through the use of proceeds line by line, reports that the prospectus does not mention HBM at all. Some generalist coverage has characterized the raise as funding an HBM3E push. The filing is the arbiter, and the filing is silent.
The supporting evidence points the same way. Roughly 99 percent of CXMT’s 2025 revenue came from DDR and LPDDR. SemiAnalysis puts HBM at about 5,000 of roughly 265,000 monthly wafer starts at the end of 2025, rising to perhaps 30,000 by the end of 2026, and describes the company as still unable to stabilize 8-high HBM3, with 12-high harder again.
None of this is irrational. It is the opposite. TrendForce found that in the first quarter of 2026, the per-wafer revenue and profitability of 64GB DDR5 server modules surpassed HBM for the first time in the industry’s history. HBM dies are larger, because of the through-silicon vias, so the same wafer yields fewer of them, and then stacking takes another cut. For a company optimizing its own economics right now, every wafer moved to HBM is a wafer that earns less.
And this is where the seam opens. Beijing needs HBM, because the model layer cannot run without it and export controls have made the shortfall a national problem. CXMT’s unit economics say make commodity DRAM. With 29.5 billion yuan in hand and a prospectus that does not name HBM, the company has told you which instruction it is following. The IPO does not merely fail to fund the option the market may be paying for. It funds the wafer capacity that competes with it.
What is actually being priced
Strip it down. At any price the book produces on Wednesday, an investor is buying two things bolted together.
The first is a high-cost commodity memory manufacturer at some multiple of peak-cycle earnings, with no take-or-pay contract structure disclosed, whose costs sit 30 percent above the leaders and which therefore breaks before they do when DRAM rolls over.
The second is a lottery ticket on a national HBM program that the company’s own use of proceeds does not finance, and which fails slowly, quietly and unnewsworthily, as nothing happening for several years.
Both are real. The DRAM franchise in particular is enormous and China genuinely needs it. But they have to be priced separately, because they fail for entirely different reasons and on entirely different clocks.
The market is not pricing them separately. It is pricing a story. The arithmetic behind the two-to-three-trillion talk is visible if you look for it: assume full-year 2026 attributable profit of 150 to 200 billion yuan, apply the 20 times that Chinese brokers apply to strategic semiconductor assets, and you land at three to four trillion. Every step is defensible in isolation. The first step annualizes a peak. The second step applies a franchise multiple to it. Do both at once and you have paid a franchise price for a cycle.
For scale, at three trillion yuan CXMT would be the largest company on the A-share market, ahead of ICBC at roughly 2.7 trillion. The last private round, in which Alibaba put in 6.1 billion yuan for 3.85 percent, valued the company at 158.4 billion. The market is discussing a step-up of roughly twenty times, in about a year, on a company whose cost position has not moved.
What to watch, and when
Three things, in order of how quickly they resolve.
Wednesday, July 15: the offering price, and whether the special risk announcement appears. It appears if the price is rich against the sector, and it also appears if the price was set above where the long-horizon institutions bid. Either way, the issuer must publish a document explaining why. That document is the A-share market stating its theory of memory out loud, in a filing, on a date.
Monthly: the DDR contract price. TrendForce publishes it. Every yuan of the denominator under every multiple discussed above rests on it. It has not turned. It was still rising as of June 30, and the incumbents fell 20 percent anyway, which tells you the equity market does not wait for the print.
Quarterly: CXMT’s HBM wafer allocation, if it is ever disclosed. Not HBM press releases, which will be enthusiastic and unfalsifiable. The wafer count. That number, and only that number, tells you whether the option is being funded.
Read the seam between the cycle and the story
Silicon is the substrate of the machine this publication reads, and memory is the substrate of the substrate. Nothing above it runs without it. The model layer’s ceiling is set by HBM, and HBM is set by wafers, and wafers are allocated by whoever is optimizing the margin on them.
Which is why the most important line in this prospectus is one that isn’t there. A company can be strategically indispensable and financially cyclical at the same time, and the market’s characteristic error is to collapse those two facts into one. The world’s best memory companies are indispensable and they trade at five to seven times earnings, because indispensable and cheap are not a contradiction in a commodity business. They are the normal condition of one.
This week, the global market marked that down by a fifth while contract prices were still climbing. Five days later, in a market that has just pushed SMIC past Moutai, the same commodity comes up for sale again.
The A-share market gets to state its theory on Wednesday. It will be published, it will be dated, and it will be wrong or right for reasons that are already visible in a document the company has already filed.
Inside China’s Machine is research, not investment advice.
Verification appendix.
Confirmed, from CXMT’s STAR Market prospectus and its July 9 book-build announcement filed with the SSE: offering size of 29.5 billion yuan for not less than 10 percent of post-issue equity, with a greenshoe; book-build July 13, pricing July 15, subscription July 16; use of proceeds of 7.5 billion, 13.0 billion and 9.0 billion yuan across three named projects; 2025 attributable net profit of 1.875 billion yuan; first-half 2026 guidance of 110 to 120 billion yuan of revenue and 50 to 57 billion yuan of attributable net profit; the two conditions triggering the special investment risk announcement. The 295 billion yuan capitalization is arithmetic on the planned raise and the minimum float, not a price.
Confirmed, from company reports: Micron fiscal Q3 2026 revenue, gross margin, EPS, Q4 guidance and the sixteen strategic customer agreements; SK Hynix Q1 2026 revenue, operating profit, operating margin and net margin; SK Hynix ADR pricing, proceeds and first-day close.
Market data, current as of July 10 to 12, 2026, and moving daily: forward multiples for Micron and SK Hynix, per FactSet; the drawdowns in Micron, Samsung, SK Hynix and the Roundhill memory ETF; aggregate semiconductor market-value decline, per Yahoo Finance’s basket; ICBC and SMIC A-share market capitalizations. Forward multiples for CXMT are computed by annualizing company guidance against a market capitalization implied by the planned raise, and are illustrative of a floor, not a projection.
Estimated, and attributed to SemiAnalysis, which reconstructs these from supply-chain sources and the filing rather than reading them off it: CXMT’s DDR5 cost per bit relative to the incumbents; its DRAM ASP relative to the incumbents; its HBM wafer allocation and trajectory; its HBM3 8-high yield difficulties; the absence of HBM from the use of proceeds. The DDR5-versus-HBM per-wafer profitability crossover is attributed to TrendForce.
Market commentary, cited as evidence of what is being discussed rather than as forecast: the two-to-three-trillion-yuan valuation range; the 150 to 200 billion yuan full-year profit and 20 times multiple used to reach it; Nomura’s shortage thesis; the UBS and Bank of America characterizations of the July drawdown.
Current as of July 12, 2026.
This is a tightly reasoned distinction between a strategically important company and a properly valued company.
What I found especially useful is the way you separate CXMT’s actual DRAM business from the HBM future that investors may be attaching to it. China clearly needs domestic HBM capability, but the prospectus does not appear to direct the offering proceeds toward a defined HBM program. The market may therefore be assigning value to an option that the company itself has not yet demonstrated it is funding.
I am still learning the memory market, so I am cautious about drawing a firm conclusion from the recent correction. But the larger question your essay raises for me is whether Micron’s decline is merely a reset within a powerful memory cycle or an early warning about the financial structure surrounding that cycle.
Demand for memory remains substantial, contract prices have remained strong, and AI continues to require enormous amounts of DRAM and HBM. That makes a lasting collapse in the underlying market difficult to assume. But strong demand does not prevent equity prices from outrunning realistic earnings and production expectations.
The additional concern is leverage. South Korea’s market has become heavily concentrated around Samsung and SK Hynix while leveraged retail participation has increased. Meanwhile, Micron and SK Hynix are becoming more directly comparable and tradable across the U.S. and Korean markets. A valuation correction in one market can therefore alter sentiment and pricing in the other before the underlying memory contracts change.
That may be the broader tell here. The memory business can remain fundamentally strong while the equities built around it become financially fragile.
Your essay makes the CXMT valuation question unusually clear: the market must distinguish between present earnings produced by an exceptional shortage and future strategic value that has not yet been funded or achieved.