SK Hynix SK Hynix, one of the world’s leading memory chip manufacturers from South Korea, completed its IPO on the Nasdaq Global Select Market, raising $26.5 billion through an offering of American Depositary Receipts (ADR) on 10 Jul 2024, setting a record. Foreign IPO This marks the highest-valued foreign company IPO listing on the U.S. stock market, surpassing the previous record held by Alibaba in 2014.
The shares initially traded under the ticker SKHYV before changing to SKHY. On the first day, the stock closed at $168.01, up 13% from the $149 offering price, reflecting strong demand from U.S. investors eager to access a company central to the AI supply chain. “Memory chips” have become assets sought by investors worldwide, rivaling even GPU manufacturers like Nvidia.
What’s notable about this deal is not that SK Hynix is a new company—it has been listed on the Korean stock exchange (KRX) for decades. This U.S. market entry is through issuing ADRs referencing its existing Korean shares, making it easier for U.S. investors to trade without dealing with foreign markets.
Three to four years ago, AI investor interest mostly focused on GPU makers or AI model developers. Now, the market values companies producing HBM (High Bandwidth Memory), a high-speed memory working alongside GPUs. HBM acts like fuel for AI chips, and as AI models grow larger, the demand for faster, higher-bandwidth memory surges.
SK Hynix's origins trace back to 1983 when Hyundai Group founded Hyundai Electronics Industries to develop South Korea’s semiconductor industry, a strategic sector amid global electronics market growth.
Initially, the company focused on producing DRAM (Dynamic Random Access Memory), a temporary data storage chip that allows processors rapid access. Heavy investment in factories and chip-making technology made Hyundai Electronics a major global DRAM producer in the 1990s.
However, rapid expansion became a burden during the 1997-1998 Asian Financial Crisis when memory chip prices plummeted. The company, burdened with heavy debt, underwent major restructuring, renamed Hynix Semiconductor in 2001, and relied on creditors for years. A planned acquisition by Micron Technology in 2002 failed.
A turning point came in 2012 when SK Group acquired controlling shares from creditors, renaming the company SK Hynix. In 2013, SK Hynix and Advanced Micro Devices (AMD) launched the world’s first commercial HBM, stacking DRAM layers vertically to greatly increase data speed while reducing power consumption.
Today, SK Hynix is among the world’s largest memory semiconductor producers, with main products including:
These products serve diverse industries from data centers, servers, smartphones, and computers to automotive and appliances. SK Hynix’s standout product in the AI era is HBM, for which it holds about 51% of the global market, ahead of Samsung Electronics and Micron Technology. It is also a key supplier to Nvidia, the leading AI chip designer.
SK Hynix’s HBM is placed close to GPUs via Advanced Packaging technology, enabling faster data transfer than traditional memory—a critical factor for training and running large AI models.
This partnership makes SK Hynix a direct beneficiary of Nvidia’s growth. However, reliance on a few major customers poses risks if orders shift or competition intensifies.
The deal’s success reflects market optimism about the AI chip industry. Despite pricing ADS above the average Korean stock price, demand exceeded supply by more than seven times, and shares opened about 14% above the IPO price on the first trading day.
Another key factor is that many U.S. investors cannot directly invest in Korean stocks. Trading on Nasdaq allows global funds easier access to SK Hynix shares and helps reduce the “Korea Discount,” where Korean tech stocks often trade at lower valuations due to governance, ownership structure, and geopolitical risks.
According to filings, the $26.5 billion raised will be used mainly for three purposes:
Additionally, SK Hynix announced plans for a $4 billion advanced packaging factory in Indiana, USA. Its core investments remain in South Korea, including a $39 billion chip manufacturing cluster in Yongin. This expansion aligns with U.S. government efforts to attract major chip producers to domestic facilities, reducing reliance on Asian supply chains.
Despite the successful launch, several issues require investor attention.
1. Will HBM demand continue?
Chey Tae-won, SK Hynix’s chairman, stated that although the company plans to double production capacity in five years, demand from major customers remains unmet. HBM demand is growing rapidly with no signs of slowing, especially as AI expands from model training to AI agents, physical AI, and intelligent robots—all requiring massive memory. If true, the memory business may be entering a new cycle unlike before.
2. Memory business remains cyclical.
Despite AI’s positive outlook, the DRAM and NAND industries have historically experienced boom-bust cycles. When demand surges, producers build new plants, which can lead to overcapacity and price drops. Whether AI can sustain continuous demand to avoid this cycle is still uncertain.
3. Competition is intensifying.
SK Hynix currently leads the HBM market and this segment is its highest-margin business. However, competitors Samsung and Micron are aggressively developing HBM4 technology and expanding capacity. If rivals catch up technologically or capture more Nvidia orders, SK Hynix’s advantage could diminish.
4. Stock valuation already reflects high expectations.
Before Nasdaq listing, SK Hynix’s market capitalization approached $1 trillion after a strong price rally in Korea driven by AI hype. This implies the market expects the company to maintain HBM leadership for years and not just current earnings. A slowdown in AI growth or below-expected data center investment could pressure the stock.
5. Short-term volatility remains.
Although the ADR debuted strongly, the Korean stock price fell the next day amid profit-taking and concerns about HBM4 growth prospects, indicating ongoing market volatility despite strong long-term fundamentals.
SK Hynix’s Nasdaq listing came about one month after SpaceX set the world’s largest IPO record, showing that investment in AI infrastructure and advanced technology companies remains a key global theme.
For decades, DRAM makers were viewed as commodity businesses with volatile profits tied to chip prices. SK Hynix’s U.S. listing may signal that capital markets are reevaluating such companies, similar to Micron.
In an era where AI competition involves not just models or GPUs but memory, chip packaging, and semiconductor manufacturing capacity, SK Hynix is recognized as a major player in the global AI economic infrastructure. This explains why investors propelled this DRAM maker to set the record for the largest foreign company fundraising in U.S. stock market history.
Sources Bloomberg , TechCrunch , CNBC
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