South Korea

SK Hynix Plans $29B Nasdaq ADR Listing

Is SK Hynix poised to profit from the AI boom or headed for catastrophe when the bubble bursts?

Published JUN 25

Story

Above: SK Hynix's logo outside its Bundang office in Seongnam, South Korea, on Jan. 26, 2024 Image credit: JUNG YEON-JE/AFP/Getty Images

The Facts

South Korean chip manufacturer SK Hynix announced plans on Wednesday to raise approximately $29 billion through an American depositary receipt listing on the Nasdaq Global Select Market, with trading expected to begin July 10.
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The Wall Street Journal
CNBC
In a regulatory filing with the Korea Exchange, SK Hynix stated that it would issue 17.79 million new registered common shares at a value of 45.45 trillion won, based on Tuesday's closing price of 2.55 million won.
DART
The final price, however, will not be decided until July 9, U.S. time, a day before the company's Nasdaq debut, after the offer's underwriters — BofA Securities, Citigroup Global Markets, Goldman Sachs and JP Morgan Securities — complete the bookbuilding process, which is set to begin on July 6.
DART
US Securities and Exchange Commission
The company plans to use the proceeds to fund construction of new chip factories in South Korea, including the first fab at the Yongin Semiconductor Cluster and an advanced packaging plant in Cheongju, as well as chipmaking equipment such as EUV scanners.
DART
US Securities and Exchange Commission
SK Hynix claimed that the listing would enhance its global brand recognition and investor base, thereby increasing its engagement with major U.S. investors and customers, while strengthening its alignment with America's semiconductor policy.
DART
If the offering meets expectations, it would rank among the largest equity raises in history, surpassing Saudi Aramco's $25.6 billion IPO in 2019, which was the global record until SpaceX's IPO earlier this month. Markets, meanwhile, reacted positively to the news, with the company's share price rising 12%.
Financial Times
Bloomberg
Forbes
The Economist

Sources Split

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The Spin

Pro-establishment narrative

With the AI market in full bloom, the time is right for SK Hynix, a company already raking in $34.5 billion in quarterly revenue, to list on the Nasdaq. This move will both generate the funds required to develop new, advanced plants and fabs in South Korea and equip it with more advanced gear, while positioning it at the heart of the AI revolution happening in the U.S.

DART

US Securities and Exchange Commission

Establishment-critical narrative

The spiraling expansion of the AI market suggests the bubble is close to bursting, given that the speculation fuelling it depends entirely on unsustainable AI infrastructure spending that cannot last indefinitely. When it pops, the consequences will be catastrophic, perhaps even eclipsing the fallout of the dot-com boom, leaving companies like SK Hynix in deep trouble.