Key Points
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SK Hynix launched a U.S. listing to raise about $28 billion, set to price this week.
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It would rank as the second-biggest share sale in history, behind only SpaceX.
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Major investors have already indicated interest in up to $7 billion of the offering.
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One of the most important companies in the artificial intelligence (AI) supply chain is about to become far easier for U.S. investors to own. South Korea’s SK Hynix (FRA: HY9H) is the world’s leading maker of the high-bandwidth memory that sits alongside Nvidia‘s chips in AI data centers. This week, it launched a U.S. share sale to raise about 43 trillion won, or roughly $28 billion. The listing is expected to price on Thursday, July 9, with the stock set to begin trading on Friday, July 10.
For anyone trying to invest in the AI memory boom, this is a name worth understanding. Here’s what the deal involves and what it changes.
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A record-sized offering
The scale is the headline. At about $28 billion, SK Hynix’s listing would rank as the second-biggest share sale in history, behind only SpaceX’s roughly $85.7 billion initial public offering last month. It would surpass Saudi Aramco’s $25.6 billion IPO in 2019 and Alibaba‘s similar-sized 2014 debut.
The structure is worth knowing, too. SK Hynix will sell 17.79 million new shares through American depositary receipts (ADRs) on the Nasdaq, with 10 ADRs representing one common share. A filing this week set a reference price of 242,500 won per ADR, based on the stock’s July 3 close in Seoul. Because these are new shares, the proceeds flow to the company itself, not to insiders cashing out.
Big money is already lining up
Demand is running ahead of the deal. Baillie Gifford Overseas, along with funds managed by Coatue Management and Situational Awareness Partners, have each separately indicated interest in buying up to a combined $7 billion worth of the ADRs. That is interest covering a substantial chunk of a $28 billion offering before the stock has even priced.
That interest reflects how well SK Hynix’s business is doing. The stock is up more than 200% this year in Seoul, and the company’s market value has climbed past $1 trillion. Its customers include the biggest names in AI, including Nvidia and Alphabet‘s Google.
The money is going toward more capacity
Unlike a listing that simply cashes out early backers, this one funds growth. SK Hynix said the proceeds will go toward building chip factories in South Korea and buying chipmaking equipment, including an extreme ultraviolet lithography scanner made by ASML.
That matters because the constraint in AI memory right now isn’t demand. It’s supply. High-bandwidth memory has been sold out well in advance across the industry, and the companies that can add capacity fastest stand to capture most of the boom. Pouring $28 billion into new factories and advanced equipment is SK Hynix’s bid to stay at the front of that race.
It reshapes the AI memory landscape
For U.S. investors, a listed SK Hynix changes the available choices. Until now, the main pure-play way to invest in AI memory on a U.S. exchange has been Micron. Of course, chip-equipment and broad semiconductor funds offered indirect exposure, but a direct stake in a leading memory maker was harder to come by. SK Hynix’s arrival adds a second heavyweight, and arguably the industry’s high-bandwidth memory leader, to that short list. Samsung, another major supplier, trades in Seoul.
So, is SK Hynix’s debut one to jump on?
I’d give the company some time to execute before jumping in and buying shares. Sure, the business is exceptional, and gaining direct access to the high-bandwidth memory leader is a genuine positive for U.S. investors.
But two cautions apply. First, memory is deeply cyclical, and after a run of more than 200% this year, a lot of good news is already in the price. That is the same peak-cycle worry weighing on Micron and Samsung shares in recent sessions. Second, newly listed stocks can be volatile in their early days, especially one this size arriving in a jumpy market.
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Daniel Sparks and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML, Alphabet, Micron Technology, and Nvidia. The Motley Fool recommends Alibaba Group. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
