SK Hynix, a South Korean chipmaker and a leading provider of high-bandwidth memory (HBM) chips crucial for AI systems, launched a U.S. share sale this week to raise an estimated $28.07 billion to $29.4 billion. This move is part of the company's strategy to benefit from the global artificial intelligence boom and could be one of the largest new share sales globally, potentially the second biggest after SpaceX's recent $85.7 billion IPO.
Several major investors, including Baillie Gifford Overseas, Coatue Management, and Situational Awareness Partners, have expressed interest in purchasing up to $7 billion worth of SK Hynix's American Depositary Receipts (ADRs). The offering involves selling 17.79 million new shares through ADRs on the Nasdaq, with 10 ADRs representing one common share. The proceeds will be allocated towards building new chip factories in South Korea and acquiring critical chipmaking equipment, such as extreme ultraviolet scanners from ASML.
Industry analysts and financial experts view this U.S. listing as a significant development. Dave Mazza, CEO of Roundhill Investments, noted that it provides U.S. institutions with easier access to SK Hynix stock, a company that has been a major player but difficult for them to own directly. Interactive Brokers' chief strategist, Steve Sosnick, believes the listing will primarily benefit individual and smaller institutional investors by removing an "accessibility discount" rather than a "quality discount." There's also an expectation that SK Hynix will join the Philadelphia SE semiconductor index, which could draw in passive investments.
The listing aims to broaden SK Hynix's investor base and potentially narrow its valuation gap with U.S. rival Micron. HSBC recently increased its valuation of SK Hynix, applying a 20% premium. The final pricing for the New York listing is anticipated on Thursday, with trading expected to commence on Friday. SK Hynix management is meeting with global investors on a roadshow this week to drum up further interest.
