South Korean memory chip maker SK Hynix, a rival to Samsung and U.S.-based Micron, plans to sell about 17.8 million shares in a U.S. IPO, the company announced Monday. Based on SK Hynix’s closing price on the Seoul market last Friday, the company could raise about $28 billion if its shares sell (and if there is any indication that it will), Bloomberg reports.
SK Hynix plans to offer American Depositary Receipts (ADRs), a type of certificate that allows U.S. investors to buy foreign stocks without having to trade directly on overseas exchanges. Each ADR represents one-tenth of an ordinary share. Prices for these securities will be determined on Thursday and trading is expected to begin on Friday.
Like Micron, SK Hynix is also riding the AI-driven boom and is credited with AI for both its sales and stock price. The company said its first-quarter revenue was up nearly 200% year over year, and its stock price is up about 260% so far this year. This is because the systems running AI are very memory intensive. As new AI data centers proliferate across the country as hyperscalers like Amazon, Microsoft, Google, and Oracle race to build so-called AI factories, demand outstrips supply and memory chips such as high-bandwidth memory (HBM), DRAM, and NAND (the various types of chips that store and move data within AI systems) are in short supply. This situation is called “Ramageddon.” Apple executives said they were forced to raise prices on Mac computers and iPads due to shortages.
South Korean tech companies, led by SK Hynix and Samsung, have pledged to spend more than $550 billion to build new manufacturing capacity in response. It’s actually a dangerous adventure. By the time these facilities are built, the memory needed for AI may change, leaving more supply than the market wants and causing prices to collapse. But for now, Wall Street is looking for another Nvidia, and the memory chip maker is one of the closest options they have.
Its closest U.S. comparison, Micron, has soared nearly 700% over the past year, buoyed by record AI-driven memory demand and profits, pushing its valuation to more than $1 trillion.
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