SK Hynix's highly anticipated U.S. stock market debut is off to a strong start, with demand for the South Korean memory chipmaker's $28 billion American depositary receipt (ADR) offering reportedly exceeding available shares by more than seven times.
The offering, which is expected to become the world's second-largest share sale after SpaceX's record $85.7 billion initial public offering last month, is designed to help SK Hynix finance new semiconductor manufacturing facilities and equipment as global demand for AI memory chips continues to outpace supply.
Reuters first reported the oversubscription, citing a source familiar with the matter who spoke on condition of anonymity because details of the offering remain confidential.
SK Hynix declined to comment on the level of investor demand.
The company plans to price its ADR offering on Thursday, with trading scheduled to begin Friday on the Nasdaq. Under the structure of the offering, 10 ADRs will represent one common share. A regulatory filing earlier this week referenced a price of 242,500 South Korean won per ADR based on the company's July 3 closing price in Seoul, although SK Hynix shares closed significantly higher at 2,186,000 won on Thursday.
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.
As earnings have climbed faster than the share price, the company's valuation multiple has actually fallen from about 7.9 times forward earnings at the end of October to its current level of roughly 5.5 times.
The deal has already attracted strong interest from institutional investors. Investment firm Baillie Gifford Overseas, funds managed by Coatue Management, and Situational Awareness Partners have separately expressed interest in purchasing up to a combined $7 billion worth of the ADRs, according to the company's regulatory filings.
Still, not everyone expects the Nasdaq listing to significantly boost SK Hynix's valuation back home. Lee Min-hee, an analyst at BNK Investment & Securities, told Reuters that while the U.S. listing broadens the company's investor base, domestic shares will likely continue to face the longstanding Korea discount, limiting the immediate impact on Seoul-listed stock prices.
