SK Hynix Begins $28 Billion Nasdaq Listing Amid AI Growth
SK Hynix has launched an American Depositary Receipt (ADR) offering worth about $28 billion on the Nasdaq. As a result, the South Korean chipmaker is set to complete one of the largest share sales ever by a foreign company. The ADRs will trade under the ticker SKHY.
The company plans to issue 17.79 million new shares, with every common share represented by ten ADRs. Meanwhile, the offering price range will be announced based on the stock’s trading price in Seoul. The final price is scheduled for Thursday, while trading is expected to begin on Friday.
Early investor demand has already reached as much as $7 billion. However, SK Hynix shares in Seoul fell 4.2% as the broader Kospi index dropped 2.2%. Analysts believe global institutional investors have shifted funds from Korean-listed shares in preparation for buying the ADRs.
AI Demand Drives Expansion Plans
SK Hynix has emerged as one of the biggest beneficiaries of the artificial intelligence boom. The company ranks as the world’s second-largest memory chipmaker and supplies high-bandwidth memory chips to Nvidia and Alphabet. Consequently, its share price has climbed about 273% this year.
The company plans to use the proceeds to expand chip production capacity. Specifically, it will build new manufacturing facilities in Yongin, South Korea, and Indiana, United States. In addition, the funds will support equipment purchases, including advanced extreme ultraviolet scanners from ASML. Last week, SK Hynix also announced a 100 trillion won ($64.38 billion) investment plan for new semiconductor plants.
If the offering reaches its expected size, it will surpass Saudi Aramco’s 2019 IPO and Alibaba’s 2014 U.S. listing.
US Listing Could Boost Valuation
Analysts expect the Nasdaq listing to narrow SK Hynix’s valuation gap with U.S.-based rival Micron Technology. Moreover, HSBC recently increased its valuation by applying a 20% premium to its previous price-to-book multiple, citing improved access for global investors.
The ADR could also qualify for inclusion in the Philadelphia SE Semiconductor Index. Therefore, passive investment funds may increase their holdings once the stock joins the benchmark.
Meanwhile, South Korea recently announced a $576 billion semiconductor investment program led by SK Hynix and Samsung Electronics. President Lee Jae Myung has also urged officials to speed up the implementation of the initiative.
