SK Hynix Listed a $28 Billion Share Sale. Its Stock Is Soaring On The First Day Of U.S. Trading
The stock of SK Hynix is soaring on Friday on its first day of U.S. trading. The company’s ADRs opened at $170 per share, a 14% increase, as appetite for the South Korean company remains elevated. The ADRs were initially priced at $149 as the company seeks to finance its expansion plans, which include new factories and equipment.
Under the structure of the offering, 10 ADRs represent one common share. The fundraising comes at a pivotal moment for the global semiconductor industry, where AI infrastructure spending has transformed the fortunes of memory chip manufacturers. SK Hynix has emerged as the world’s leading supplier of high-bandwidth memory (HBM), an advanced type of memory essential for training and operating large artificial intelligence models.
Its HBM chips have become a critical component in AI systems powered by Nvidia graphics processors. Nvidia CEO Jensen Huang recently reaffirmed that SK Hynix would remain the company’s largest memory partner, while also warning that shortages of advanced AI memory are likely to continue for several years because demand remains exceptionally strong.
“As long as there is demand for graphic processors and AI data centers, SK Hynix is indispensable,” Yoo Hoi-jun, an electrical engineering professor at the Korea Advanced Institute of Science & Technology, told Reuters.
“We are in the midst of a memory super cycle, with all three major suppliers, Samsung, SK Hynix and Micron, riding the AI-driven demand wave,” Di Zhou, portfolio manager at Thornburg Investment Management, previously told the outlet. Zhou added that broadening the company’s investor base through a U.S. listing could reduce its valuation discount relative to American rival Micron Technology.
Despite commanding a stronger position in high-bandwidth memory, SK Hynix currently trades at a lower valuation than Micron. The Korean company trades at roughly 5.5 times projected earnings over the next 12 months, compared with Micron’s forward price-to-earnings multiple of about 6.66.
Market observers have long argued that many South Korean companies trade at discounted valuations because of corporate governance concerns, a phenomenon commonly referred to as the “Korea discount.” Although SK Hynix shares have fallen roughly 25% during the past two weeks as technology stocks cooled globally, they remain approximately 680% higher than a year ago.
That dramatic appreciation has been supported by even faster earnings growth. Reuters reported that profits have become so substantial that employees are expected to receive annual bonuses averaging about $574,500, underscoring the financial windfall created by surging demand for AI memory chips.
