SK Hynix, a major global memory chip manufacturer from South Korea, has filed to list on the U.S. stock market by offering American Depositary Receipts (ADRs) to raise up to $29.4 billion. If successful, this would be one of the largest capital raises in global market history, as the company seeks to capitalize on ongoing investor demand for AI-related stocks.
If the offering is priced within the planned range, this deal would become the world's second-largest IPO, behind only SpaceX's offering in early June. Its value would surpass Saudi Aramco’s $25.6 billion IPO in 2019 and Alibaba’s $21.8 billion IPO in 2014.
Amid the global AI boom, with massive investments flowing into this smart technology, attention is focusing on businesses connected to AI, particularly semiconductor companies that have become a critical infrastructure of the era.
Meanwhile, major global tech companies are accelerating fundraising through both debt and equity markets. For example, SpaceX recently went public for the first time, and major AI firms like OpenAI and Anthropic are preparing IPOs. Alphabet also recently announced plans to raise $80 billion through stock issuance.
Currently, SK Hynix, listed in South Korea, has a market capitalization of about $1.2 trillion and is among the biggest beneficiaries of the AI trend. Its stock price has risen more than 280% since the start of the year, outperforming competitors such as Samsung Electronics and Micron Technology.
SK Hynix and Samsung together account for over 40% of the Kospi index in South Korea, leading some analysts to view the Korean stock market as overly dependent on the semiconductor industry, which could heighten risks if adverse events occur.
SK Hynix manufactures High Bandwidth Memory (HBM) chips, key components in AI systems, with major clients including Nvidia and Google. According to the company’s SEC filings, SK Hynix is the world leader in the HBM market, holding over 56% global market share, and ranks second in both the DRAM and NAND markets.
SK Hynix’s fundraising will be conducted through American Depositary Receipts (ADRs) listed on the U.S. stock market, with plans to trade on Nasdaq.
An ADR represents foreign securities traded in the U.S. market, acting as a bridge between global capital markets and the U.S. It enables foreign companies to access funding from American investors, while U.S. investors can more easily buy foreign stocks through domestic exchanges.
Foreign companies can make a public offering of ADRs on U.S. exchanges, establishing a trading base in the U.S. market and using ADRs as a channel for fundraising.
ADR prices are denominated and traded in U.S. dollars, with U.S. financial institutions holding the underlying shares. For SK Hynix, the institutions managing the ADR offering include BofA Securities, Citigroup Global Markets, Goldman Sachs, and JPMorgan Securities.
. . . SK Hynix plans to issue up to 17.79 million new shares. . . . This is valued at approximately 45.45 trillion Korean won, or about $29.43 billion U.S. dollars. . . . The ADR ratio is 10 ADR units for each one common share of SK Hynix.
The final sale price will be set after the investor demand book-building process, with the initial price range referencing SK Hynix's closing stock price of 2.555 million won per share on Tuesday, approximately $1,651.69 USD per share.
The company began accepting orders on July 6, ahead of setting the final price on July 9, with plans to start trading on Nasdaq the following day.
Listing via ADR will help SK Hynix expand its investor base, elevate its status to a global corporation, and allow its true valuation to be more appropriately recognized.
It will also provide access to capital, which the company plans to use to build a new chip manufacturing plant in South Korea and to purchase semiconductor production equipment, expanding capacity to meet growing AI chip demand.
UBS analysts note that retail investors holding SK Hynix shares listed in South Korea remain relatively low worldwide. Although some U.S. brokers have recently allowed access to Korean stocks, this service is still new, suggesting that investment via ADRs will likely increase.
Investors are also closely watching whether SK Hynix ADRs can be freely converted back into common shares traded in South Korea.
According to SEC filings, ADR holders can cancel their ADRs and receive equivalent common shares traded on the Seoul market. However, converting South Korean common shares back into ADRs is restricted and requires approval from South Korean regulators.
If conversion is limited, the ADR supply may be insufficient for demand, causing ADR prices to trade at a premium compared to Korean shares. This is similar to Taiwan's TSMC ADRs in the U.S., which recently traded at about a 16% premium over shares traded in Taiwan.
The strong demand for SK Hynix is evident from oversubscription, with orders far exceeding the number of shares offered, coming from global long-term funds and investors focused on technology stocks.
Bloomberg reports that global investment funds such as Baillie Gifford, Coatue Management, and Situational Awareness have expressed interest in purchasing SK Hynix ADRs worth up to $7 billion in this initial offering.
Source:Reuters,CNBC, Bloomberg [1][2],SEC,Business Times,Investopedia
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