SK hynix to Debut on Nasdaq, Seeking $26.5 Billion in AI Chip Boom

By Kim Han-joo

SEOUL, July 10 (Yonhap) -- South Korean chip giant SK hynix Inc. is set to make its debut on the tech-heavy Nasdaq on Friday, opening a powerful new fundraising channel and broadening access to global investors seeking exposure to the booming artificial intelligence (AI) infrastructure market.

The world's second-largest memory chipmaker is expected to raise about 40 trillion won (US$26.5 billion) through the listing of its American depositary receipts (ADRs) on Nasdaq. The offering consists of 177.9 million ADRs priced at $149 each, with each ADR representing one-tenth of a Seoul-listed common share.

The listing is expected to rank among the largest U.S. equity offerings by a foreign company and become the second-largest equity offering in the U.S. market after SpaceX, underscoring strong global investor appetite for companies at the center of the AI boom.

Observers say beyond providing a substantial cash infusion, the Nasdaq listing is expected to strengthen SK hynix's long-term fundraising capability by enhancing its global valuation and expanding its access to international capital markets.

"The SK hynix ADR listing is significant because it gives U.S. and global investors who do not have direct access to the South Korean stock market an opportunity to invest in the world's leading high bandwidth memory supplier," said an industry official, who asked not to be named.

SK hynix established its leadership by moving early into high bandwidth memory (HBM), becoming Nvidia Corp.'s key supplier as demand for AI accelerators surged.

The strategy delivered record earnings and enabled the company to overtake longtime rival Samsung Electronics Co. to become South Korea's most valuable listed company by market capitalization for the first time in 25 years.

Earlier this year, SK Group Chairman Chey Tae-won said the ADR listing would help transform SK hynix into a "more global company" by expanding its shareholder base beyond South Korea to investors in the U.S. and other overseas markets.

During Friday's Nasdaq listing ceremony, Chey and other senior executives are expected to present the company's technological leadership and long-term growth strategy to global investors.

The Nasdaq debut is also expected to help narrow SK hynix's valuation gap with U.S. rival Micron Technology Inc.

Despite maintaining a lead in the HBM market and outperforming Micron in both global DRAM market share and operating profit, SK hynix has traded at a price-to-earnings ratio (PER) roughly 20-40 percent lower than its U.S. competitor.

Analysts say the ADR listing could further enhance the company's global valuation by removing barriers that have historically limited U.S. institutional investment in domestic equities, including differences in trading hours, currency exposure and investment procedures.

"Global competitors are trading at PER multiples above 10 times this year's expected earnings, while SK hynix continues to trade at a significantly lower multiple," said Park Jun-young, an analyst at Hanwha Investment & Securities. "The ADR listing could serve as a catalyst for closing that valuation discount."

SK hynix priced the ADRs at about a 2.9 percent premium to Thursday's closing price of its common shares in Seoul, suggesting the company is confident that global investors will support the offering despite recent volatility in the company's domestic share price.

The proceeds are expected to strengthen SK hynix's financial flexibility as it ramps up investment to meet surging demand for AI memory chips and advanced semiconductor manufacturing capacity.

Earlier, SK hynix said the proceeds will be used to build a new semiconductor fabrication plant and an advanced chip packaging facility in South Korea as part of a government-led initiative.

The company also plans to invest 11.9 trillion won in extreme ultraviolet (EUV) lithography equipment scheduled for installation by the end of next year.