CXMT's Listing Sends U.S. Memory Chip Stocks Tumbling! Is This a "Black Monday" or a "Golden Opportunity"?

CXMT opened at RMB 49.50 per share, surging 471.59% from its IPO price of RMB 8.66. It closed at RMB 49.00, up 465.82%, giving the company a total market capitalization of approximately RMB 3.28 trillion, surpassing Industrial and Commercial Bank of China to become the most valuable company in the A-share market.

The stock recorded RMB 141.2 billion in turnover during the day, setting a new A-share record for the highest single-day trading value by an individual stock.

At the same time, U.S. memory chip stocks came under heavy selling pressure. Sandisk closed down more than 11%, after falling over 13% intraday. SK Hynix ADR dropped more than 7.5%, closing below its IPO price for the first time since listing on July 10. Western Digital and Seagate Technology both fell more than 4%, while Micron Technology lost more than 2%. The Philadelphia Semiconductor Index declined 2.23%.

One market was celebrating while the other was selling off sharply. The contrasting performances point to one reality: the global DRAM supply landscape is undergoing an irreversible transformation. At the same time, some investors believe the pullback in U.S. memory chip stocks presents a fresh buying opportunity.

Why Did U.S. Memory Chip Stocks Fall?

First Layer: Concerns Over Rising Supply

For decades, the global DRAM market has been dominated by three major players—Samsung, SK Hynix, and Micron—which together control more than 90% of the global market. The rise of CXMT means this "three-player club" is gradually becoming a four-player market.

More importantly, CXMT's DRAM chips are estimated to be priced 5% to 10% lower than comparable products from Samsung, SK Hynix, and Micron. Once production capacity expands significantly, a price war is widely viewed as inevitable. Current DRAM pricing has largely been supported by tight supply discipline among the three major producers. Any increase in supply could weaken this pricing structure.

In addition, China accounts for approximately 34% of global DRAM demand, while domestic suppliers represented only about 23% of the market in the first quarter of 2026. CXMT's listing and production expansion are essentially accelerating efforts to fill this gap.

In its coverage of CXMT's listing, the Financial Times stated that the company's rise demonstrates China's success in building a domestic AI supply chain that is no longer dependent on key U.S. technologies affected by export controls. For Micron, SK Hynix, and Samsung, this means they could not only lose market share in China but also face a larger, lower-cost competitor in the global market.

Second Layer: Growing Doubts Over the "Circular Financing" Model

Nvidia is currently advancing a new round of AI infrastructure transactions worth more than US$750 billion in total. These include an AI partnership exceeding US$500 billion with SK Group, as well as ongoing discussions with OpenAI regarding a financing arrangement worth up to US$250 billion to support data center leasing projects.

Critics argue that many of the companies Nvidia invests in or holds stakes in are also its largest chip customers. Nvidia provides financing, investments, or equity support to these companies, which then use the funds to purchase more Nvidia chips. The market is concerned that this model may distort genuine demand and encourage inefficient investment. If companies investing hundreds of billions of dollars fail to generate sufficient returns, this financing structure could amplify future losses.

Gary Tan, portfolio manager at Allspring Global Investments, said that while Nvidia's investments and partnerships strengthen confidence in long-term AI infrastructure development, investor concerns about circular financing remain. Bloomberg macro strategist Michael Ball also noted that Nvidia's latest infrastructure agreements have reignited market concerns about the sustainability of AI capital expenditure and cash flow dynamics.

Other Factors

First, reports that Apple may source memory chips from Chinese suppliers continue to influence market sentiment. Earlier in July, reports emerged that Apple was in discussions to purchase memory chips from two Chinese companies, triggering the first wave of selling across semiconductor stocks. CXMT's listing has turned this concern from a possibility into something investors believe is actively unfolding.

Second, doubts surrounding the returns on AI capital spending continue to grow. Alphabet previously lost US$300 billion in market value in a single day after raising its capital expenditure guidance, reflecting investors' declining patience with rising AI spending. Memory chip companies, as upstream suppliers in the AI industry chain, have also been affected by this sentiment.

Third, the memory chip sector had already accumulated significant unrealized gains. The current memory cycle began in the fourth quarter of 2025, driven by explosive AI server demand, with global memory stocks delivering gains of over 100% and institutional positioning reaching its highest level in nearly a decade. CXMT's listing became the catalyst for profit-taking.

Opportunity or Risk? TMGM's View

In the short term, the sell-off may not be over. Microsoft, Meta, Amazon, and Apple are all scheduled to report earnings this week. Combined, these companies have already announced more than US$500 billion in capital expenditure plans for 2026. If earnings reports show further increases in spending while returns remain slow to materialize, investor concerns over AI investment efficiency are likely to intensify.

Goldman Sachs analysts noted that the S&P 500's recent sideways performance has been driven largely by doubts over whether AI infrastructure investment can continue generating sustainable returns. This week's earnings season is expected to provide a key test.

From a medium-term perspective, however, the fundamental outlook remains intact. Monday's sell-off has not changed the underlying supply-demand dynamics of the memory chip industry. According to TrendForce, average contract prices for general DRAM rose 58%–63% in the second quarter of 2026, while NAND contract prices increased 55%–60%. SK Hynix reported a 596% year-on-year increase in second-quarter operating profit, with quarterly earnings exceeding its total profit for all of 2025. These are established facts that cannot be erased by short-term market sentiment.

Some investors believe the correction offers a new buying opportunity. That view is based on the assumption that although the US$950 billion semiconductor cooperation announcements failed to support stock prices on the day, they still represent genuine long-term demand. The US$950 billion figure reflects a five-year investment horizon, while Monday's sharp decline was primarily a short-term emotional reaction in the market. They represent two very different timeframes.

However, near-term market direction will depend on this week's earnings reports from major technology companies. If the relationship between AI capital spending and future returns is validated during this earnings season, memory chip stocks could find fundamental support for a rebound. If not, the current decline may not yet have reached its bottom.