This Memory Chip Stock Just Surged 531%. It’s Not SK Hynix or Micron

There’s a new red-hot memory chip stock in town, ChangXin Memory Technologies (CXMT), a lesser-known Chinese company that most investors probably never heard of before its blockbuster IPO and 531% single-day surge, as well as reports swirling around business with Apple (NASDAQ:AAPL | AAPL Price Prediction) as it looks to diversify beyond the Big Three memory makers amid the global supply crunch.

China’s memory chip juggernaut is hitting the ground running

Undoubtedly, as soon as CMXT went live in the Chinese market, it became the largest firm in mainland China. With memory stocks and the broader semiconductor industry facing intense choppiness, though, the big question is whether the underrated semi play is the answer to the global memory shortage or if the stunning debut is coming a bit late to the party, with growing concerns that the red-hot memory plays might have reached peak hype.

Of course, the fundamentals and tailwinds couldn’t be stronger, but, at the end of the day, that’s not saying a lot if the valuations are already up there and investors are already expecting (and demanding) a lot. In any case, for most American investors, the name won’t be investable as it’s not yet listed on the Nasdaq or NYSE and, as of this writing, there are no plans to.

So, unless you’ve got access to the Shanghai stock market, the name is probably out of reach for the time being anyway. Also, there’s added risk in investing in Chinese stocks, especially since it’s unclear whether there will be regulatory pushback with any dealings with Apple.

CXMT: The big mover you never knew

In the meantime, CXMT is definitely a name to keep tabs on. It’s a giant that’s giving the world an alternative to the profoundly powerful memory chip trio that is Samsung, SK Hynix (NASDAQ:SKHY), which only recently debuted on the U.S. markets by way of IPO, and, of course, America’s own Micron (NASDAQ:MU).

While the AI revolution has created a seemingly insatiable demand for high-bandwidth memory (HBM), CXMT does seem to be playing a major role in supplying ample DRAM to the consumer market.

As Apple looks to use CXMT as a strategic way to regain more leverage in memory chip negotiations, I think this won’t be the last time we’ll hear about the hottest new Chinese company, especially if Apple looks to win a thumbs-up from the U.S. as it looks to perhaps see how far it can go with a new supplier that might offer a cure to the pains of the global memory chip shortage.

CXMT is a key pillar in China’s AI arsenal

Any way you look at it, CXMT is a serious piece of China’s AI puzzle. It’s one key ingredient to helping China become self-sufficient in this AI revolution. For now, CXMT is perhaps best-known as one of the “blacklisted” Chinese companies, but perhaps Apple’s involvement could change this, especially since there are so few alternatives to getting around this “100-year flood” going on in the memory chip market.

In the meantime, I think Micron and SK Hynix remain the go-to ways to play the memory boom, which might not be over yet, even as their share prices begin to come in. As for CXMT, it’s a name worth knowing about as it looks to balance things out in a corner of the market that’s incredibly constrained.

Contact [email protected] for any questions or corrections.