SK Hynix (HXSCL), a South Korean memory chipmaker focused on high-bandwidth memory for artificial intelligence computing, raised $26.5 billion through the largest U.S. listing ever completed by a foreign company. Its American depositary receipts were indicated to open at $175 on Friday in New York, representing a potential 17% gain from the $149 offering price. The offering was reportedly more than seven times oversubscribed, suggesting investors remain interested in gaining direct exposure to SK Hynix's strong position in the high-bandwidth memory market. Baillie Gifford (Trades, Portfolio), Coatue Management, and Situational Awareness Partners were allocated approximately $5 billion of ADRs as cornerstone investors, which was $2 billion below the maximum amount disclosed in the company's U.S. regulatory filings. SK Hynix Chairman Chey Tae-won told Bloomberg Television that demand is expected to grow exponentially, while Chief Executive Officer Kwak Noh-Jung described high-bandwidth memory as being at the center of the AI revolution.
The strong demand for the offering comes despite recent volatility across semiconductor stocks and South Korea's technology-heavy Kospi Index. SK Hynix's Seoul-listed shares have declined 25% from their record close on June 22, although the stock remains approximately 235% higher this year. The shares have also recorded more than 50 trading sessions this year with movements of at least 5% in either direction, compared with roughly 37 such sessions during all of last year and approximately 44 across the previous three years combined. Di Zhou, a portfolio manager at Thornburg Investment Management, said the memory industry is currently experiencing a super-cycle and described SK Hynix as one of the highest-quality pure-play memory companies globally. Zhou noted that building a semiconductor fabrication plant takes at least three years, which could support a memory shortage for another two to three years if demand remains strong, although any weakness in demand may pose the main risk to that outlook.
The U.S. listing could help narrow SK Hynix's valuation gap with Micron Technology NASDAQ:MU, a U.S. memory chipmaker, while giving American investors easier access to the South Korean company's shares. Chey also indicated that SK Hynix may issue additional U.S. shares if the company can generate sufficiently strong returns and attract further investor demand. The company plans to use the offering proceeds to expand production capacity and purchase extreme ultraviolet lithography machines, supporting its investment in advanced memory manufacturing. SK Hynix and Samsung Electronics (SSNLF), a South Korean technology company and rival memory chipmaker, are also expected to invest in domestic projects under a government-led initiative valued at at least $880 billion. The successful transaction may also encourage more Asian technology companies to consider U.S. listings, including Kioxia Holdings, a Tokyo-based memory chip company preparing a U.S. offering after its Japanese shares gained more than 2,900% during the past year.