New York (AFP) – South Korean chip giant SK hynix soared 13 percent on its first day of trading on Wall Street on Friday, capping one of the world’s biggest ever stock sales as it takes advantage of the AI boom. The Asian semiconductor giant’s American depositary shares (ADSs) ended its first session at $168 after being priced at $149, with the listing on the tech-heavy Nasdaq index raising $26.5 billion.
SK hynix, a major supplier of advanced memory chips to industry behemoth Nvidia, has seen profits skyrocket thanks to the global race to build artificial intelligence data centers. Tech stocks have tumbled in recent weeks on fears of overheated valuations; however, SK hynix has soared more than 220 percent this year in Seoul. There are also questions about when enormous global AI spending will reap returns. Nonetheless, the Nasdaq listing enjoyed considerable interest and was more than seven times oversubscribed, according to US media.
The amount raised did not come close to the record $75 billion raised in SpaceX’s IPO last month, which made founder Elon Musk the world’s first trillionaire. However, it beat out Saudi Aramco’s 2019 $25.6 billion debut in the Gulf and the $21.8 billion raised by Chinese tech firm Alibaba in its New York initial public offering. SK hynix listed through ADSs, which allow slices of foreign companies to be traded on US public markets.
Dilin Wu, research strategist at Pepperstone, told AFP that the pricing clearly indicates that “the AI memory cycle is real, the earnings are real.” He previously called the listing “a huge development that should broaden the capital base for the memory sector.” The offering was led by BofA Securities, Citigroup Global Markets, Goldman Sachs (Asia), and J.P. Morgan Securities, according to SK hynix.
Following the announcement, SK hynix shares jumped 2.7 percent on Seoul’s Kospi index. The company’s market capitalization on the Kospi soared past $1 trillion in May. That milestone was also recently hit by domestic rival Samsung Electronics and US chipmaker Micron, with AI thrusting the three firms into a previously exclusive club of around a dozen companies, nearly all American.
An image of an SK hynix jacket went viral in South Korea this year as a symbol of wealth and success, with parody posts depicting it as a “golden ticket” to luxury boutiques or better dating prospects. Samsung, SK hynix, and Micron dominate the global market for the advanced components known as high-bandwidth memory (HBM), which are used in AI servers alongside other data-crunching semiconductors. As chipmakers plough resources into lucrative HBM, shortages of the less flashy memory chips in consumer electronics are pushing up prices, with Apple hiking the cost of its MacBooks and iPads.
Counterpoint Research analyst MS Hwang mentioned that SK hynix aims to triumph over Samsung in the red-hot memory chip market. “Along with the HBM leadership it has demonstrated until recently, the company is now planning to take the lead in terms of volume as well,” Hwang told AFP. “Funds from its US listing can support such a goal.”
SK hynix announced on Friday that it plans to use the proceeds from the offering to fund the construction of the first fab at a new semiconductor cluster in Yongin near Seoul, as well as to build an advanced packaging facility in the central city of Cheongju, among other projects. The company, along with Samsung, is also involved in a massive public-private investment of 800 trillion won to build a new chip hub in southwest South Korea.
The AI chip boom has fueled debate over what South Korea should do with the tax windfall, as well as workers’ demands over pay packages, with Samsung averting a strike by agreeing on a deal regarding bonuses.
© 2024 AFP
