SK Hynix Inc. shares surged after the memory chipmaker unveiled its plan for a $29 billion US listing, a move that analysts viewed as boosting valuations through capacity expansion and greater foreign investor access.
The stock jumped as much as 12% in early Thursday trading, before trimming its advance to around 8%. Samsung Electronics Co. also rallied after memory chip rival Micron Technology Inc posted quarterly sales forecast that crushed Wall Street estimates. The two chip heavyweight’s moves helped drive the Kospi Index up by 6%.
SK Hynix is seeking 45.45 trillion won in a US listing after its Seoul-traded stock climbed more than 800% in the past 12 months, lifting the company’s market value above $1 trillion. The company expects the American depositary receipts to begin trading on July 10 and intends to use the proceeds for the building of additional capacity and buying extreme ultraviolet lithography machines.
The planned US debut has been a much-awaited event for global money managers, who longed for easier, direct access to the leading supplier of high-bandwidth memory. Positioned at the heart of the AI supply chain, its coveted product drove a rally in its stock and triggered massive inflows into leveraged exchange-traded funds listed at home and overseas tracking its performance.
“Going forward, the market’s focus will shift from demand to execution, particularly SK Hynix’s ability to expand HBM capacity and deliver on aggressive production targets in the US,” said Jung In Yun, chief executive officer at Fibonacci Asset Management Global. There might be some arbitrage activity between ADRs and ordinary shares, but “this should be viewed as a positive development that enhances liquidity and price discovery, rather than as a source of shareholder dilution,” he said.
At the proposed size, SK Hynix’s ADR sale would be among the top three first-time share sales ever, depending on the exchange rate. It would rival Saudi Aramco’s $29.4 billion 2019 IPO, according to data compiled by Bloomberg.
Investors are drawing comparison to chip giant Taiwan Semiconductor Manufacturing Co., which listed its ADRs in 1997. The Korean chipmaker’s US debut would give it access to a fresh pool of investors and could help it narrow a gap in its valuation compared with its competitors. SK Hynix trades at 7.5 times forward earnings in Seoul and Samsung at 6.7 times, a discount to 21 for TSMC and 9.5 for Micron.
“A liquid US listing could help reposition SK Hynix alongside global semiconductor leaders such as TSMC, whose ADR has attracted deep institutional ownership and commands a valuation premium,” said Aadil Ebrahim, group head of equities at Klay Group. “Greater visibility, improved accessibility, and stronger institutional participation could help narrow the valuation gap.”
