Memory chip giant SK hynix bags $26.5B in blockbuster US listing

South Korean memory chipmaker SK hynix Inc. has priced its American Depository Receipts at $149, raising around $26.5 billion ahead of its debut on the Nasdaq exchange Friday.

The decision to list its shares on the American exchange is a strategic move that aims to tap into the enormous enthusiasm for artificial intelligence-related stocks. SK hynix is the world’s top supplier of high-bandwidth memory chips, which are a critical component of the AI servers that power generative AI chatbots and agentic workloads.

Bloomberg reported that demand for SK hynix’s U.S. share sale exceeded the available number of shares by seven times, citing a person familiar with details of the listing. The company has not commented publicly on the level of demand it saw for the sale.

SK hynix’s ADRs will begin trading on the Nasdaq from tomorrow under the “SKHY” ticker symbol. The price of the ADRs, which are a kind of certificate that makes it possible to trade foreign stocks without having to buy or sell them directly on an overseas exchange platform, is based on its current share price Seoul’s Kospi index, where it’s already traded. Today the stock closed at a price of 2,186,000 won (about $1,449) per share. Ten ADRs are equivalent to one common share.

The $26.5 billion that SK hynix has pocketed means that the listing becomes the second-biggest share sale in history, surpassing Saudi Aramco’s $25.6 billion IPO in 2019. SpaceX Corp., which went public last month, holds the record after raising a stunning $85.7 billion on its first day of trading.

In its initial public offering prospectus, SK hynix said the funds from the sale will be used to finance the construction of new chipmaking facilities and the purchase of the sophisticated equipment necessary for those factories. The raise should also help the chipmaker narrow the valuation gap between itself and the U.S. memory chip manufacturer Micron Technology Inc., which has a larger market capitalization despite its lower market share in key memory product segments.

Micron’s stock price has soared beyond that of its rival, primarily because it’s more accessible to the world’s largest pool of investors. At present, Micron trades at a 12-month forward price-to-earnings ratio of 6.66 times, compared with 5.5 times for SK hynix.

Futurum Group analyst Daniel Newman told Bloomberg that SK hynix leads Micron in terms of its market share and its proximity to Nvidia Corp., the world’s most dominant AI chipmaker. “But Micron competes on power efficiency, U.S. positioning and momentum from third place,” the analyst said.

SK hynix and Micron dominate the global market for memory chips alongside Samsung Electronics Co. Ltd. All three specialize in manufacturing HBM chips, which are used to store the data that’s computed by AI accelerators such as Nvidia’s graphics processing units. Though Samsung is the world’s largest memory chip supplier in terms of its total shipment volume, SK hynix is considered to be the leader in the HBM segment.

Last month, Nvidia Chief Executive Jensen Huang emphasized the company’s status, telling media that SK hynix will continue to be its “largest partner” for some time to come, since the current global memory chip shortage is expected to persist for “a few years” thanks to the demand of the AI industry.

SK hynix has seen its stock price decline recently following a turbulent few weeks that has hit semiconductor firms more broadly. But it’s still sitting on historic gains, up more than 239% in the year to date and more than 644% over the last 12 months. Those numbers are impressive, but SK hynix’s stock gains have actually been outpaced by its growing profitability. It has made such enormous earnings that it’s planning to give each employee an annual bonus of about $574,000.

“SK hynix holds an edge in production scale and maturity,” Ken Mahoney of Mahoney Asset Management LLC told Bloomberg. “Across the board, since demand is outweighing supply, they have had tremendous pricing power. Generally speaking, first-mover advantage is and was their strength.”

Despite the U.S. listing, BNK Investment & Securities analyst Lee Min-hee said he does not expect a significant jump in SK hynix’s local share price in Korea. That’s because Korean companies tend to trade at lower valuations than their foreign counterparts because of concerns around corporate governance, he said.

Photo: SK hynix