SK hynix Makes a Splashy Debut, Drawing Seven Times the Nasdaq Offering

SK hynix's U.S. market debut through an American Depositary Receipt (ADR) is off to a roaring start. Demand in the local market far exceeded the offering size, easing recent concerns that semiconductor stocks may have already peaked. Foreign investors appear to be betting more on the durability of the growth rally driven by rising artificial intelligence (AI) demand than on the idea that chip stocks have reached a high point.
According to the investment banking industry on the 9th, the book-building process for SK hynix's ADR ahead of its listing drew subscriptions more than seven times the size of the offering. The ADR will begin temporary trading on the Nasdaq Global Select Market under the ticker 'SKHYV' on the 10th local time, before moving to regular trading on the 13th. The offering price will be set in the afternoon of the 9th in New York. If it is priced near the previous day's closing level of 2.076 million won, the fundraising amount is estimated at $24.5 billion, or about 37 trillion won. That would make it the second-largest ADR listing by a foreign company, after Alibaba Group's $25 billion deal.
The fundraising size, once discussed at around $29 billion, or about 43.4942 trillion won, has been reduced because of a share-price correction. SK hynix stock hit an all-time high of 2.987 million won on the 25th of last month, but it had fallen to 2.186 million won by the close of trading on the day.
SK hynix's ADR has already secured major cornerstone investors. Three large investment firms, including Sequoia Awareness Partners, Baillie Gifford, and Coatue Management, reportedly expressed an intention to buy as much as $7 billion worth of shares. Cornerstone investment is a system in which key institutional investors agree in advance to purchase part of the offering before a listing. Because this is only an expression of interest and not legally binding, the final allocation may change, but it remains a useful gauge of investor confidence.
Analysts say the strong reception reflects solid AI demand expectations, even as global semiconductor stocks have weakened amid recent talk of a chip peak. Concerns were fueled by Meta Platforms' review of its cloud business, but the market appears to have placed greater weight on forecasts that chip demand remains strong.
Lee Jae-won, an analyst at Yuanta Securities Korea, said, "Even foreign investment banks that have raised concerns about a memory correction are forecasting profit growth next year, so a sharp earnings decline cannot be considered the consensus." He added, "Nothing has actually been confirmed yet, including downward revisions to capital expenditure guidance, renegotiations of long-term supply agreements, falling server DRAM prices, or a slowdown in high-bandwidth memory (HBM) orders."
Kim Dong-won, head of research at KB Securities, said, "Next year, DRAM and NAND wafer production capacity is expected to rise only 7% and 4%, respectively, from a year earlier, while demand is projected to grow 17% and 19%." He added, "The memory shortage is likely to deepen further next year, and the rate of memory price increases in the second half of this year will likely exceed market expectations."
The ADR listing is expected to trigger a revaluation not only of SK hynix's domestic shares but also of Korean semiconductor stocks more broadly. The key question is whether the premium formed in the U.S. will be fully reflected in the local shares. TSMC's ADR, for example, trades at a premium of about 10% to its Taiwan-listed shares. UBS recently recommended buying the stock, saying ADRs are more efficient to hold than local shares and carry a premium. An asset management industry official said, "When the value of an ADR rises, the value of the local shares rises as well." The official added, "If the local shares are excessively undervalued relative to the ADR, buying interest will shift to the local stock and narrow the gap."
jisseo@fnnews.com Seo Min-ji Hong Chae-wan Reporter