CXMT's IPO on the Shanghai exchange saw its shares surge 466 per cent on the first day, momentarily making it China's most valuable company. This dramatic rise, while seemingly a bubble, is attributed to factors like underpricing, a common practice in China, and the high demand for memory chips.

Despite the boom, the semiconductor industry is known for its cyclical nature, with Gartner forecasting a 25 per cent capacity increase in the next two years. Furthermore, signs of peaking demand are emerging as companies reassess the cost of AI computing tokens. IBM, for example, is shifting focus from token usage to AI strategy value.

However, the AI boom driving chip demand may evolve. New hardware configurations and specializations are emerging, keeping supply chains active. CXMT benefits from its "Chinese-ness," ensuring domestic demand, though it faces limitations in accessing advanced European and US chipmaking equipment. Yet, it has developed advanced techniques with partners like Huawei.

Even with potential drops in token pricing, CXMT and its peers could continue to grow if cheaper computing power fuels further AI demand. Apple's interest in sourcing chips from CXMT, despite US restrictions, highlights the company's perceived value. While the global AI trade might be entering a bubbly phase, CXMT's trajectory suggests factors beyond mere speculation are at play, particularly with its focus on "good enough" chips and its ability to innovate despite sanctions.