CXMT IPO Launches, TSMC Earnings Shine but Taiwan Stocks Plunge – Chen Feng-hsin Reveals Biggest Semiconductor Concern

China's largest dynamic random-access memory (DRAM) chip manufacturer, ChangXin Memory Technologies (CXMT), officially opened its IPO subscription on May 16, aiming to raise approximately $8.6 billion (about NT$277 billion). The company is scheduled to list on the Shanghai Stock Exchange on May 27, potentially becoming the largest IPO in Asia so far this year.

Meanwhile, Taiwan Semiconductor Manufacturing Company (TSMC) delivered strong financial results during its earnings call on May 16, reporting record-high profits and announcing a significant increase in capital expenditure. Despite these positive developments, Taiwan's stock market experienced its worst single-day plunge in history on May 17, closing down 2,953.71 points.

Senior media commentator Chen Feng-hsin analyzed the situation on her program "Feng Xiang Long Feng Pei," stating that market sentiment has shifted toward a pessimistic narrative.

Why Are the Three Memory Giants Under Pressure?

Chen noted that CXMT's IPO has generated significant enthusiasm in China, with many institutional investors already heavily invested in the company. U.S.-based Barron's magazine estimated that CXMT's fundraising of around $8.5 billion would enable faster capacity expansion to capture global market share.

Chen emphasized that the market is now closely watching whether CXMT can successfully challenge the dominance of the three global memory leaders—Samsung, SK Hynix, and Micron. Therefore, the more successful CXMT's IPO, the greater the pressure on these three giants.

TSMC's Earnings Exceed Expectations, but Market Worries Over Soaring Capital Expenditure

Chen continued that TSMC's earnings call was impressive, with record-high profitability and a gross margin reaching 67.7%, exceeding expectations. The company also raised its full-year 2026 U.S. dollar revenue growth forecast from "over 30%" to "slightly above 40%."

Given TSMC and CXMT's strong performance, why did the market react negatively?

She argued that TSMC's decision to significantly increase capital expenditure to $64 billion in response to customer demand has raised concerns. The market fears the industry may have reached its peak, leading to oversupply and subsequent price declines.

From 'Cai Jin Cai Tu' to Semiconductor Cycles – Oversupply Becomes Market Concern

Chen used the idiom "Cai Jin Cai Tu" (Vegetable Gold, Vegetable Dirt) to illustrate the semiconductor cycle. After a typhoon drives up vegetable prices, farmers expand cultivation. But after some time, the simultaneous harvest floods the market with excess supply, causing prices to collapse.

Chen stressed that the semiconductor industry has historically followed a cyclical fate: "demand growth → supply expansion → peak → demand decline → oversupply." However, recently, companies like TSMC and Micron have promoted a new narrative—that semiconductors, driven by the AI wave, have become a perpetually growing industry, as all AI demands rely on chips.

Yet, Chen pointed out that market sentiment has turned pessimistic, believing the semiconductor industry is still subject to cyclical patterns. As a result, capacity expansion is now seen as a negative signal rather than positive—whether it's CXMT's expansion or TSMC's increased capital spending.

More exclusive Feng Media insights: • Taiwan blackout's cost beyond halted fabs? Former Intel CEO warns: Global disaster worse than Great Depression • TSMC down to 2,290—time to buy? Scholar reveals 'two-stage profit' after margin call: Institutions are depressing prices to build positions • U.S. memory stocks surge then crash—bad omen for Taiwan? Ruan Mu-hua highlights one shocking fact: 'Never seen this before'—global markets hinge on just four stocks