The AI chip boom has created one of Wall Street’s biggest moments to date. South Korean memory chip giant SK Hynix said Friday it had raised $26.5 billion (KRW 40 trillion) in its U.S. market debut.
SK Hynix sold 177.9 million shares as American Depositary Shares (ADRs) at $149 per share. It is structured so that American investors can purchase it in Seoul at a price of about one-tenth of the full stock price. The deal marks the largest U.S. debut by a non-U.S. company, surpassing Alibaba’s $25 billion IPO in 2014.
The company begins trading today (Friday, July 10) on the Nasdaq under the temporary ticker SKHYV. Regular trading begins on Monday, July 13th, when the ticker will officially become SKHY. So far, American investors are doing well. The stock opened 14% above its IPO price, and the price is still trending higher in Friday morning trading.
This is despite US stocks being priced at a 2.7% premium to Seoul’s three-day average, according to data submitted to the Korea Stock Exchange. However, according to media reports, demand for the offering was said to be more than seven times the number of shares available.
This is especially surprising considering that Korean companies have long traded at a discount to their global counterparts. This valuation gap is called the Korea discount. Investors cite factors such as complex corporate governance, low shareholder returns, regulatory uncertainty, and geopolitical risks associated with North Korea to justify why North Korean companies do not achieve higher stock prices.
However, it is clear that SK Hynix is not experiencing a Korea discount. This is because they manufacture memory semiconductors such as high bandwidth memory (HBM). HBM is a core component of AI GPU processors. And now Nvidia relies on SK Hynix as one of its key suppliers.
According to the filing, the funds raised from enthusiastic US investors will be routed to three locations. A new fab in South Korea (currently under construction to address the global memory shortage caused by AI); New packaging facility in the country EUV scanner, the machine that will enable the next generation of chips.
Meanwhile, U.S. Commerce Secretary Howard Lutnick stopped by a Micron event on Thursday to deliver a message not just for the U.S. memory maker Micron (one of SK Hynix’s biggest competitors), but for the broader chip industry. Lutnick reportedly said he was already in talks with Samsung (the world’s third-largest memory maker) and SK Hynix about building a new factory in the United States. The idea is that we cannot allow Korea to continue to be the country that dominates this important technology.
Of course, Micron is also participating. Micron announced plans to invest $250 billion in new U.S. manufacturing. This is a pledge by the American memory chip company that will create more than 90,000 jobs and keep cutting-edge chip production on American soil.
The timing of Lutnick’s request is noteworthy, even after SK Hynix’s recent U.S. IPO. Both South Korean chipmakers have pledged to invest more than $550 billion in new manufacturing investments in Korea.
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