SK Hynix launches $28 billion U.S. share sale in AI boom bet
Chipmaker taps Nasdaq listing to broaden investor base as memory supercycle accelerates.
South Korean chipmaker SK Hynix on Monday launched a U.S. share sale to raise 43 trillion won ($28.07 billion), as it capitalizes on the global AI boom through one of the world’s largest equity offerings.
The company will issue 17.79 million new shares in the form of American Depositary Receipts (ADRs) listed on Nasdaq. Ten ADRs will represent one common share. The price range for the offering is expected to be announced later on Monday, based on SK Hynix’s Seoul trading price.
The deal comes as Asian chipmakers tap strong global demand for AI-related stocks. Taiwan’s Unimicron Technology is also seeking to raise about $1.4 billion through a sale of global depositary shares, which represent local stock listed overseas.
SK Hynix shares ended Monday down 3.4% at 2,343,000 won, though the stock is still up about 260% this year. South Korea’s KOSPI index fell 0.5% on Monday.
Memory chip stocks have been volatile in recent sessions, partly due to renewed investor concerns about how long the AI-driven boom will last.
“We are in the midst of a memory supercycle, with all three major suppliers, Samsung, SK Hynix, and Micron, riding the AI-driven demand wave,” said Di Zhou, portfolio manager at Thornburg Investment Management in Santa Fe, New Mexico, which manages about $60 billion in assets and holds SK Hynix’s Korean ordinary shares.
He added that SK Hynix’s ADR listing is positive because it broadens the company’s investor base and could narrow its valuation gap with U.S. rival Micron.
“While market volatility has been quite high recently, I would expect demand for SK Hynix shares to remain relatively robust,” said Albert Yong, managing partner at Petra Capital Management.
South Korea last week unveiled a sweeping industrial strategy centered on semiconductors and AI, including a $576 billion chip investment program in the country’s southwest to distribute the benefits of the boom.
SK Hynix and Samsung Electronics are expected to anchor the investment program, according to the government.
South Korean President Lee Jae Myung on Monday ordered officials to move quickly on major chip and AI projects announced last week, warning that delays in permits, land acquisition, and securing power and water supply could undermine the country’s ambition to dominate advanced industries.
Memory inflation concerns
SK Hynix has been one of the world’s biggest beneficiaries of the AI surge, outperforming rivals Samsung and Micron.
“This is more than a liquidity event,” said Dave Mazza, CEO of Roundhill Investments in New York, which manages an exchange-traded fund tracking DRAM manufacturers. “SK Hynix has been one of the most important companies in the world that many U.S. institutions could not easily own.”
“The listing removes an accessibility discount, not a quality discount.”
Steve Sosnick, chief strategist at Interactive Brokers in Connecticut, said individual investors and smaller institutions would benefit most from the U.S. listing, rather than large institutional investors.
“The new listing will make it easier for capital-hungry Hynix to directly access a new group of momentum-driven investors,” Sosnick said.
SK Hynix said proceeds from the ADR issuance will be used to build chip factories in South Korea and purchase chipmaking equipment, including extreme ultraviolet lithography scanners made by Dutch equipment maker ASML.
The final price of the New York listing is expected to be set on Thursday, with trading set to begin on Friday, according to regulatory filings. Management will meet global investors on a roadshow this week.
The deal is expected to be one of the largest share offerings ever, surpassing Saudi Aramco’s $25.6 billion IPO in 2019 and Alibaba’s similarly sized listing in 2014.
Some investors, however, remain cautious that memory “inflation” could dent spending on AI infrastructure, mobile phones, and PCs.
“We expect better access, but timing of the memory cycle is equally important,” said Sundeep Gantori, chief investment officer for equities at Standard Chartered. “We believe the memory cycle is beyond the early phase and now in the mid-cycle stage.”
SK Hynix is a key supplier of high-bandwidth memory chips used in AI systems by customers such as Nvidia and Alphabet’s Google.
The company is expected to join the semiconductor-heavy Philadelphia Semiconductor Index, analysts said, potentially boosting passive investment flows.
Last month, HSBC raised its valuation of SK Hynix by applying a 20% premium to its previous price-to-book multiple of 2.8x, implying 3.4x, citing “more proactive shareholder-friendly initiatives and improved accessibility to global investors.”
