CXMT became the most valuable company in the mainland (China)
AI and everything associated like RAM is like a drug for investors?
ChangXin Memory Technologies (CXMT) is the world’s fourth-largest maker of DRAM memory chips, with around eight percent market share.
WTF? I never even heard about them before?
I’ve heard that China was GETTING big on Ram, I didn’t know they were already this significant!
Also kind of insane that 8% of the DRAM market is enough to become the most valuable company in China!China is really moving up the ladder on chip production.
They are a relatively new manufacturer - but they have been around for a hot minute.
Their production ramp-up has been quite notable though, so much so that there were articles earlier in the year that Apple was seeking an exemption from US import controls in order for them to be able to use some CXMT-sourced RAM in their products.
Stock prices reflect expected future profts, not today’s. This can be shown more easily with dividend stocks but it works similarly with growth stocks. Say a company X announces they’ll be building a factory that makes Y which will be finished in 3 years. You have a good reason to believe Y will sell well at a sizeable profit. You reason that when that starts happening 3 years from now, the company X would make all this new profit and you could even estimate how much extra dividend per share it would be distributed. Based on that, you buy the stock today in order to secure this future dividend. Except I’ve also made the same conclusion and I also buy X stock. Rinse and repeat for as many people who think the same and the price of X stock goes up today with every such sale due to the increased demand. It will likely keep being bid up until a point when buying it for more than that wouldn’t make sense as far as the Y product profit goes because the expected profit wouldn’t cover it. In effect this process “transfers” expected future profits from Y back in time to today via the stock price of X.
In other words, the explosion of CXMT’s price reflects how much more market people expect it to take, profitably.
Are they going to sell all of their supply to the data centers like all the other companies?
They’ll sell to whoever pays the most like good little capitalists.
Not necessarily. The CCP funds their industry and expansion because a huge part of what the Chinese economy manufactures needs RAM and the current RAM shortage (reflected in prices) is hampering that production. It wouldn’t be too useful for their economy if CXMT sells RAM at the current exorbitant prices. Also if they sell at these prices, it would mean they wouldn’t have meaningfully increased supply, so they wouldn’t have solved the original problem that gave them the capital for this expansion. More likely they will expand production as fast as they can and they will keep their profit margins low in order to feed all the new supply into the Chinese manufacturing economy that needs RAM. I bet the CCP will ensure they keep the margins low. As CXMT scales, prices will fall, reflecting the increased supply, at least in the Chinese market. If they (probably will) scale further, worldwide prices will fall too. If that continues and their product is good, and if they can also make good next gen RAM, that’ll be the end of RAM cartel (Micron, SK, Samsung). CXMT would still make a ton of money but that will be on volume in the short and medium term. If and when they decimate the RAM cartel and become the sole monopolist, that may change. That’ll depend on the long term strategy of the CCP, in how they’re planning to run the industries China has come to dominate.
