The AI chip boom has just created the biggest moment in Wall Street history. South Korean memory chip giant SK Hynix announced on Friday that it has raised $26.5 billion (40 trillion won) to enter the U.S. market.
SK Hynix sold 177.9 million American Depositary Shares (ADRs) at $149 each, structuring them so that U.S. investors could buy them at about one-tenth of the price of a share in Seoul. The deal was the largest U.S. debut ever by a non-U.S. company, surpassing Alibaba’s $25 billion IPO in 2014.
The company will begin trading on the Nasdaq today, Friday, July 10, under the temporary ticker SKHYV. Regular trading will begin on Monday, July 13th, with the ticker officially becoming SKHY. So far, U.S. investors are catching up. The stock opened 14% above its public offering price and continued to rise in early trading on Friday.
This is despite the company increasing the price of its U.S. shares by 2.7% above its own three-day average in Seoul, according to a filing with the Korea Stock Exchange. However, media reports say demand for the offering is more than seven times the available shares.
This is particularly surprising given that Korean companies have long traded at a discount to their global peers. This valuation difference is called the Korean discount. Investors often cite factors such as complex corporate governance structures, low shareholder returns, regulatory uncertainty and geopolitical risks related to North Korea to justify why they don’t expect the country’s companies to see higher stock prices.
However, it is clear that SK Hynix is not affected by the Korean discount, as the company manufactures memory chips, including high-bandwidth memory (HBM). HBM is a key component of AI GPU processors. And now, Nvidia relies on SK Hynix as one of its key suppliers.
According to the filing, the money raised from eager U.S. investors will be donated to three locations. One is a new factory in South Korea (currently under construction to address the global memory shortage caused by AI). A new packaging facility in the country. EUV scanners are machines that enable the production of next-generation chips.
Meanwhile, U.S. Commerce Secretary Howard Lutnick stopped by a Micron event on Thursday to deliver a message not just for U.S. memory maker Micron (one of SK Hynix’s biggest competitors) but for the broader chip industry. Lutnick reportedly said the company is 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 not to allow South Korea to remain the dominant country in this important technology.
Micron is also participating, of course. Micron has announced plans to invest $250 billion in new manufacturing in the United States, which the company claims will create more than 90,000 jobs and maintain state-of-the-art chip production in the United States.
The timing of Mr. Lutnick’s request is noteworthy beyond SK Hynix’s U.S. IPO. Both South Korean semiconductor manufacturers have just committed more than $550 billion in new manufacturing investment in South Korea.
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