On the first trading day of the A-share market after the National Day holiday, Cxmt Corporation (688825) delivered a stark lesson. During intraday trading, the stock fell as much as 7.65%, marking its largest single-day decline since its July 27 listing. By the midday close, it was down 6.79%, with its market value retreating to 3.47 trillion yuan. Half-day turnover reached 12.8 billion yuan, ranking second on the A-share trading volume board.

On the same day, Samsung Electronics released a quarterly report that electrified South Korea: third-quarter operating profit of 107.4 trillion won, up 782.5% year-on-year, setting a new record for single-quarter profit by a Korean company. On one side, "explosive profits"; on the other, "plunging stock price." Why did these two poles of the memory industry each bloom on the same day? My judgment is that this is not a story of "one side rejoicing while the other frets." The decline in Cxmt Corporation is not because its fundamentals have deteriorated.

Fundamentals: Imposingly Strong

A look at the semi-annual report just released by Cxmt Corporation reveals impressively powerful figures. In the first half of 2026, operating revenue reached 150.31 billion yuan, up 873.64% year-on-year; net profit attributable to shareholders was 77.605 billion yuan, a sharp turnaround from a loss of 2.332 billion yuan in the same period last year. Gross margin on its main business reached 84.84%, equivalent to a daily net profit of roughly 400 million yuan. Multiple institutions expect the global DRAM supply shortage to persist until the second quarter of 2028, with the company's net profit from 2026 to 2028 potentially reaching 199.7 billion, 310.3 billion, and 369.1 billion yuan respectively. The fundamentals are impeccable. So why did the market vote with its feet?

Three Reasons Behind the Decline

The most direct trigger came from Toshiba. Toshiba announced an investment of approximately 60 billion yen to expand its Philippines factory, planning to double its HDD production capacity for AI data centers by fiscal year 2027 and raise its market share from slightly above 10% to 30%. This is Toshiba's first major investment in the HDD sector in years. Although HDDs and DRAM are different storage media, the market interpreted it as a signal of "the end of supply discipline." When industry leaders begin large-scale capacity expansion, the narrative of "supply falling short of demand" in the memory industry faces fundamental questioning.

At the same time, Micron's latest earnings report also issued a warning. Although results beat guidance, the pace of contract price increases has clearly slowed, and next-quarter growth is narrowing. TrendForce data shows that DRAM spot trading is sluggish, chip prices are moving sideways, and both buyers and sellers are in a wait-and-see mood. Fourth-quarter general-purpose DRAM contract prices are expected to rise 10% to 15% quarter-on-quarter, a marked pullback from the roughly 60% quarter-on-quarter surge in the second quarter. The market has never feared price increases; it fears the pace of increases slowing down.

The second reason stems from a capital expenditure decision by Cxmt Corporation itself. On the evening of September 28, Cxmt Corporation announced plans to use excess raised funds to invest in two major new projects, with a total investment of 34.9 billion yuan—24.1 billion yuan for a technology R&D project and 10.8 billion yuan for Phase II of a memory wafer back-end testing base, with 18 billion yuan to come from excess raised funds. Undeniably, the direction is favorable. But what the market saw was a capital expenditure requiring 30 to 37 months to generate returns. With the stock already up more than 500% from its issue price, such "long-term positives" are more easily viewed by high-level shareholders as a window for cashing out. The day after the announcement, the stock fell 4.27%. Whether news is good or bad sometimes depends on the time horizon from which investors view it.

The third reason is structural pressure at the capital level. In September, Cxmt Corporation saw a net outflow of 6.991 billion yuan in main-force funds, the highest in the entire market. On October 8, main-force funds again net sold 2.756 billion yuan, while the electronics sector as a whole saw a net outflow of 17.114 billion yuan, with core semiconductor names such as Dongshan Precision, GigaDevice, and Zhongji Innolight leading the net outflows. Hong Kong-listed memory chip stocks adjusted in tandem, with Longsys falling nearly 6% and GigaDevice dropping 4.55%. Cxmt Corporation is the most important liquidity vehicle in the entire STAR Market track. When market sentiment is positive, various institutions and quantitative funds pour in continuously, and massive turnover can absorb buying pressure; but once the track's direction reverses, it becomes the first choice for institutions to concentratedly reduce positions. After listing, it oscillated in the 50 to 60 yuan range for more than two months, accumulating a large volume of turnover chips. Once trend expectations waver, range support can easily be breached with heavy volume.

Divergence Among Institutions

Cxmt Corporation is China's largest and the world's fourth-largest DRAM manufacturer, a core memory supplier in the AI computing era. Morgan Stanley initiated coverage with an "overweight" rating and a target price of 88 yuan; Goldman Sachs gave a "buy" rating with a target price of 129 yuan; Nomura Securities set a target price of 116 yuan; UBS set a target price of 70 yuan. The target prices given by multiple institutions are all higher than the intraday low of 50.6 yuan that day.

But bearish voices are equally clear. The DRAM industry is highly cyclical, with significant price volatility. Cxmt Corporation Vice President Yuan Yuan explicitly warned during the IPO roadshow: "If adverse changes occur in the macroeconomy, AI demand falls short of expectations, or new capacity is released in a concentrated manner, the industry may return to a downturn cycle." "Current product prices are at high levels, and sustained sharp price increases are not sustainable"—this sentence was written by Cxmt Corporation itself as a risk warning in its semi-annual report.

Essence: Valuation Digestion and Chip Restructuring

The decline in Cxmt Corporation is essentially a concentrated release of "valuation digestion" and "chip restructuring," not a signal of "fundamental deterioration." Its semi-annual report remains strong, and institutional target prices remain far above the current stock price. But the narrative of the memory industry is undergoing a subtle shift: from "supply shortage will persist until 2028" to "the slope of price increases is slowing."

From an issue price of 8.66 yuan to a market value of 3.47 trillion yuan, Cxmt Corporation's listing journey itself is a revaluation of Chinese memory assets. But such revaluation cannot forever follow a straight upward slope. When the market begins to reprice for "slower price increases" and "more distant capital returns," the process of valuation digestion must be accompanied by violent chip restructuring. AI computing demand for DRAM is real, the space for domestic substitution is clear, and the long-term logic of the memory industry has not changed. But the short-term stock price driver has temporarily shifted from "earnings realization" to "valuation digestion." For the industry, the joys and sorrows of memory are not shared. What the market buys is not today's profit, but tomorrow's slope.