NIO Stock Extends Rally: China’s 'Hottest' Memory-Chip Company Just Won An EV Backer

• Nio invested $23.3 million in CXMT’s IPO amid pressure from memory-chip costs on EV makers.
• Nio unit, Nio Power, received 18.24 million CXMT shares with an 18-month lock-up.
• CEO William Li has previously said that memory costs have added nearly 20,000 yuan to each ES8.

U.S.-listed shares of Nio, Inc. (NIO) extended their rally for a second day after the EV maker invested 158 million yuan ($23.3 million) in the IPO of ChangXin Memory Technologies (CXMT), China's largest DRAM maker, as soaring memory-chip prices continue to pressure automakers.

Nio’s U.S.-listed stock jumped 2% on Tuesday, but shares are down 0.4% overnight heading into Wednesday. 

Nio Bets On China’s DRAM Giant

Nio's unit, Nio Power Technology (Hefei), was allotted 18.24 million shares, or about 0.27% of CXMT's offering, with an 18-month lock-up period. CXMT is China's largest DRAM producer and the world's fourth-largest by market share, CnEVPost noted.

The IPO is priced at 8.66 yuan per share and could raise as much as 66.6 billion yuan if the over-allotment option is exercised, making it China's second-largest IPO ever. The offering values the company at about 579.2 billion yuan. Nio joins Xiaomi, Alibaba Cloud, Tencent, Meituan, Chery and ZTE as strategic investors in the offering.

Nio founder and CEO William Li has warned earlier that memory chips have become one of the company's biggest cost pressures. In January, he called CXMT “probably the hottest tech company in China right now," as surging memory prices forced automakers to compete with AI data centers, smartphones and consumer-electronics companies for supply. "For those of us that offer assisted driving systems and smart cockpits as standard, it's a bit tough," Li said.

The pressure has intensified this year. Li recently said that higher raw material costs, including memory chips, had increased the cost of each ES8 SUV by nearly 20,000 yuan. Fully passing those increases would require raising prices by around 30,000 yuan, though Nio is working with suppliers to offset part of the impact.

CXMT Draws Apple Interest 

The investment comes days after reports that Apple is testing CXMT's DRAM chips for devices sold in China and is seeking approval to expand their use.

The state-backed company is expected to play a key role in China's push for semiconductor self-sufficiency and is expanding capacity to challenge global leaders Samsung Electronics, SK Hynix and Micron Technology. Currently, Nio is looking to protect margins as it ramps deliveries of its new five-seat ES8 SUV and works toward maintaining profitability momentum. 

How Do Retail Traders Feel About NIO?

On Stocktwits, retail sentiment for NIO was ‘neutral’ amid ‘normal’ message volume.

One user said, “You own shares of nio you now own a 10% in a lithium miner , you own shares in Mirattery and now this.”

Another user said, “$NIO It's about time for NIO to shine, as we are heading towards Q2 earning, keeping my fingers crossed, this baby will fly!”

Nio’s U.S.-listed stock has risen 20% over the past year. 

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