00:00Now, Matt Maley is Chief Market Strategist at Militaback & Co.
00:04He also writes the Maley Report newsletter.
00:06Joining us now, thank you so much for your time, Matt.
00:09So, this is a significant listing.
00:12What does it actually mean for China's semiconductor chip-making sector?
00:18Well, it's definitely very, very important because, as you mentioned,
00:23China has been very dependent on foreign chips, especially with these memory chips.
00:29I mean, we've seen this major change from just the AI training to AI inference
00:36and now to agentic AI, and these memory chips are becoming more and more important.
00:41So, the fact that they're able to raise this kind of money to move into that area
00:47in a more significant way and become less reliant on foreign chips
00:52is going to be very important for the company and for the country,
00:56but it's also going to create some significant competition for these other companies outside China.
01:03It's interesting that CXMT wants to list this month
01:09because if you look at DRAM chips, which are in huge demand,
01:12the top three companies, they're very volatile at the moment.
01:16Why is that?
01:19Yeah, there's no question that part of it has to do with this offering here
01:24and that people are worried about some of this competition.
01:27But there's also, of course, people worried about the ROI,
01:31the return on investment that some of these hyperscalers are getting
01:34or are not getting from their big investments.
01:37So, people are starting to worry a little bit that they may pull back on their demand
01:41for all these chips.
01:42So, that's the reason for the volatility here,
01:44but I think it's still a good time for CXMT to be getting involved in this deal
01:51just in case things do turn down in a more significant way.
01:54Of course, CXMT, when it lists, is going to hopefully raise at least $8.5 billion.
02:00Do you think it's going to be using that to try and ramp up its DRAM production
02:05and ultimately squeeze Micron out of spot number three in those global rankings?
02:11Well, that's certainly going to be its goal.
02:13And, you know, it's part of the bigger goal that over the next, you know,
02:19the President Xi wants to get over the next five to ten years
02:22to be the dominant technology leader in the world.
02:26And this is an important area for them to start.
02:29And so, this is a good first move for them.
02:31And, you know, whether it works or not, we'll see.
02:33But it's something that's certainly creating a lot of tension among some of their competitors.
02:40Yeah, it's an interesting one because at the moment we know that Apple really wants to buy DRAM chips from
02:47CXMT,
02:48but it wants U.S. government approval first.
02:52What would it mean for CXMT to get Apple as a client?
02:58Well, that would be dramatic.
02:59I mean, it's funny because one of the things that Apple,
03:03they've been talking about Apple for the last couple of years about missing the AI move.
03:07Well, really, some people are saying they're smart as a fox.
03:10You know, I'm sorry, dumb as a fox that they've been holding off and not spending that money,
03:14but they will spend it once, you know, some of the dust settles.
03:18And obviously, as one of the main leaders of the biggest demand companies in the world,
03:25that would be a huge contract for China.
03:27I wonder if you could give us some insight into why these chips,
03:30which essentially are, you know, moving this AI boom so quickly,
03:35why they become, why are they strategically important and such sensitive items?
03:41Well, the biggest thing is that, well, on top of the demand, there's a shortage.
03:47There just isn't enough out there to meet the demand that they have.
03:52And so, you know, if the big question right now is, will there be a lower price involved?
04:00And people are worried about that over the longer term.
04:02But near term, the pricing is still very, very strong.
04:05And therefore, you know, that's where the margins are.
04:07That's where the profits are.
04:08And so it's the most important issue that facing a lot of these companies in the technology sector right now.
04:15How important will companies like CXMT become?
04:19Because this AI boom is just, it's got such momentum now.
04:25And we are seeing everyone using these large language models.
04:28The general public is really realizing how incredibly useful it all is.
04:33What role do you see for a company like CXMT going forward?
04:37Well, it's going to be very interesting because one of the things is that they're playing catch-up.
04:42But in an odd way, that actually may work to their benefit.
04:45Because some of these other companies have expanded so far so fast that if things do slow down,
04:50and, you know, there are a lot of people who worry that we're in an AI bubble.
04:55But the thing is, AI is going to change the world.
04:57And just like the Internet did.
04:59So those who survive, those who are actually coming in a little bit late, might actually do a little bit
05:04better.
05:04So this is going to be something that actually could work to their benefit in a very kind of odd
05:09way.
05:09Thank you so much for chatting to us.
05:11Matt Maley is Chief Market Strategist at Miller Tobacco & Co.
05:14He also writes the Maley Report newsletter.
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