Shares of high-flying memory chip maker Micron Technology fell sharply Wednesday. The initial public offering of a Chinese memory-chip rival might be testing the nerves of shareholders.
After falling more than 11% earlier in the day, Micron stock closed down 8% at $904.28. Even with today's drop, it's still up more than 200% for the year, and has risen nearly 700% over the past 12 months.
ChangXin Memory Technologies will start taking orders Thursday for a listing on Shanghai's Nasdaq-like STAR Market. CXMT is set to raise $8.55 billion, nearly double its initial target, with an implied market capitalization of around $85.5 billion.
CXMT is the world's fourth-largest manufacturer of dynamic random-access memory. It had an 8% DRAM market share in the first quarter of the year, rising from 3% for the same period a year earlier, according to Counterpoint Research.
That's still well behind Micron's 22% DRAM market share, and the even larger positions of South Korean companies SK Hynix and Samsung Electronics. But the money raised in CXMT's IPO will help it fund more production and take global market share.
Micron generates nearly 80% of its revenue from dynamic random-access memory, or DRAM. That includes the high-bandwidth memory that is key for AI servers and is driving profit growth.
Where CXMT will be limited is in its ability to supply U.S. companies and more advanced forms of hardware, such as high-bandwidth memory. CXMT is subject to American sanctions, curbing access to the most advanced chipmaking equipment.
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