South Korea's SK hynix raises US$26.5b in mega Nasdaq listing fuelled by AI chip boom

SEOUL, July 10 —  South Korean chip giant SK hynix set pricing for its mega US listing on Friday, raising US$26.5 billion as it takes advantage of the AI boom in what will be one of the world’s biggest ever stock sales.

The Asian semiconductor giant plans to issue the equivalent of around 18 million shares on Wall Street’s tech-heavy Nasdaq index later in the day.

SK hynix, a supplier of advanced memory chips to industry behemoth Nvidia, has seen profits skyrocket thanks to the global race to build artificial intelligence data centres.

Tech stocks have tumbled in recent weeks on fears of overheated valuations—SK hynix has soared more than 220 per cent this year in Seoul—and questions about when enormous global AI spending will reap returns.

But yesterday’s Nasdaq listing has enjoyed considerable interest, and was more than seven times oversubscribed, according to US media.

The amount raised did not come close to the record US$75 billion raised in SpaceX’s IPO last month, which made founder Elon Musk the world’s first trillionaire.

But it beat out Saudi Aramco’s 2019 US$25.6 billion debut in the Gulf, and the US$21.8 billion raised by Chinese tech firm Alibaba in its New York initial public offering.

SK hynix will list through something called American depositary shares (ADSs), which allow slices of foreign companies to be traded on US public markets.

The firm said 177.9 million depositary shares, each representing one-tenth of a usual share, had been set “at an initial public offering price of US$149.00 per ADS”.

High bandwidth

Dilin Wu, research strategist at Pepperstone, told AFP that the pricing says clearly that “the AI memory cycle is real, the earnings are real”.

Wu earlier called the listing “a huge development that should broaden the capital base for the memory sector”.

The offering is being led by BofA Securities, Citigroup Global Markets, Goldman Sachs (Asia) and J.P. Morgan Securities, SK hynix said.

SK hynix shares jumped 2.7 per cent on Seoul’s Kospi index following the announcement.

The company’s market capitalisation on the Kospi soared past US$1 trillion in May.

That milestone was also recently hit by domestic rival Samsung Electronics and US chipmaker Micron—with AI thrusting the three firms into a previously exclusive club of around a dozen companies, nearly all American.

An image of an SK hynix jacket went viral in South Korea this year as a symbol of wealth and success, with parody posts depicting it as a “golden ticket” to luxury boutiques or better dating prospects.

Samsung, SK hynix and Micron dominate the global market for the advanced components known as high-bandwidth memory (HBM), used in AI servers alongside other data-crunching semiconductors.

As chipmakers plough resources into lucrative HBM, shortages of the less flashy memory chips in consumer electronics are pushing up prices, with Apple hiking the cost of its MacBooks and iPads.

New chip hub 

Counterpoint Research analyst MS Hwang said SK hynix wants to triumph over Samsung in the red-hot memory chip market.

“Along with the HBM leadership it has demonstrated until recently, the company is now planning to take the lead in terms of volume as well,” Hwang told AFP.

“Funds from its US listing can support such a goal.”

SK hynix said it plans to use the proceeds from the offering to fund construction of the first fab at a new semiconductor cluster in Yongin near Seoul, and to build an advanced packaging facility in the central city of Cheongju, among other projects.

The company, along with Samsung, is also involved in a massive public-private investment of 800 trillion won to build a new chip hub in southwest South Korea.

The AI chip boom has fuelled debate over what South Korea should do with the tax windfall, as well as workers’ demands over pay packages—with Samsung averting a strike by agreeing a deal on bonuses. — AFP