Key Takeaways:
SK Hynix Inc. surged 17% in its Nasdaq debut Friday after raising $26.5 billion in the largest US share sale ever by a foreign company, signaling that investor appetite for AI-linked chip stocks remains strong despite a recent pullback.
"Global semiconductors is the most crowded trade in the world right now," said Thomas Hayes, chairman at Great Hill Capital in New York. "The bankers and the issuer are meeting demand where it is."
The South Korean memory-chip giant sold 177.9 million American depositary receipts at $149 each, with the offering more than seven times oversubscribed, a person familiar with the matter said. Each ADR represents one-tenth of a common share, which closed at about $1,450 in Seoul on Friday. The $26.5 billion haul trails only Saudi Aramco's $29.4 billion IPO in 2019 and SpaceX's $85.7 billion listing last month.
The listing gives US investors direct access to the world's dominant maker of high-bandwidth memory chips, which are essential for Nvidia Corp.'s AI processors. SK Hynix holds 56 percent of the global HBM market, and Nvidia Chief Executive Officer Jensen Huang last month called the company Nvidia's largest partner, warning that memory chip shortages could persist for years.
The Icheon, South Korea-based company plans to use the proceeds to expand chipmaking facilities and purchase advanced equipment, including a $4 billion advanced packaging plant in West Lafayette, Indiana. Commerce Secretary Howard Lutnick has pressed SK Hynix and rival Samsung Electronics Co. to boost memory chip production in the US amid a global shortage.
SK Hynix's US listing helps close a valuation gap with domestic competitor Micron Technology Inc. SK Hynix trades at about 5.8 times forward earnings, compared with Micron at roughly seven times, according to LSEG data. Micron's stock has surged 711 percent over the past 12 months.
The company's shares have climbed 222 percent in Seoul this year, pushing its market capitalization above $1 trillion for the first time in May and making it South Korea's second-most-valuable company behind Samsung at $1.2 trillion. Still, the stock has dropped 25 percent from its record high hit two weeks ago as chip stocks broadly lost momentum on concerns about slowing AI spending.
Option trading for SK Hynix is expected to begin two business days after its US debut, allowing investors to bet against the stock. Similar trading opened for SpaceX shortly after its listing last month.
This article is for informational purposes only and does not constitute investment advice.
