SK hynix will list $29 billion (about 44 trillion won) in American depositary receipts (ADR) on the Nasdaq on the 10th.
Bloomberg said on the 5th (local time) that the offering could be the largest ever for a foreign company selling stock on U.S. exchanges. The listing size surpasses Alibaba's 2014 U.S. listing ($25 billion) and Saudi Aramco's 2019 initial public offering (IPO, $25.6 billion).
Bloomberg analyzed that the purpose of the listing goes beyond simple fundraising to strengthen global competitiveness in the market for memory chips used in artificial intelligence (AI) data centers. Although SK hynix is a powerhouse in the high bandwidth memory (HBM) market, it has been listed only on the Korea Exchange, limiting direct access for U.S. investors.
With the Nasdaq listing, the company will secure eligibility for inclusion in major indexes such as the Nasdaq-100 as well as regular-session trading, raising expectations for inflows of passive funds that track them.
Daniel Morgan, senior portfolio manager at investment firm Synovus Trust, projected that listing on the U.S. stock market, the world's largest capital market, will help resolve SK hynix's undervaluation. SK hynix's 12-month forward price-earnings ratio (PER) is 6.2 times, lower than rival Micron's 7 times. Micron's PER even topped 11 times through last month.
Hedge funds seeking to arbitrage price gaps between ADRs and Seoul-listed shares could also emerge. Similar transactions were active when Alibaba and Taiwan's TSMC listed in the United States. TSMC ADRs have traded at an average premium of more than 21% over Taiwan's local shares over the past year and are currently maintaining about a 13% premium. However, it remains unclear whether conversions between ADRs and Korea-listed shares will be freely allowed, so whether the premium persists will likely depend on conversion constraints.
However, caution that the AI memory semiconductor sector is overheated is not insignificant. As big tech companies continue to raise data center investment funds in the bond and stock markets, concerns are growing over how long the favorable memory cycle will last. Ed O'Gorman, chief executive officer (CEO) of wealth manager RiverWealth Advisors, said, "Investors are taking the risk of stepping into a potential speculative bubble."