SK hynix plans $26.5b US stock debut

SEOUL — South Korean chip giant SK hynix set pricing for its mega US listing on Friday, raising $26.5 billion as it takes advantage of the AI boom in what will be one of the world's biggest-ever stock sales.

SK hynix, a supplier of advanced memory chips to industry behemoth Nvidia, has seen profits skyrocket thanks to the global race to build AI data centers.

Tech stocks have tumbled in recent weeks on fears of overheated valuations — SK hynix has soared more than 220 percent this year in Seoul — and questions about when enormous global AI spending will reap returns.

London Stock Exchange data showed SK Hynix trades at just 4.8 times 12-month forward earnings, compared with the industry median of 29.84 times.

But Friday's Nasdaq listing has enjoyed considerable interest, and was more than seven times oversubscribed, according to US media.

Asian stocks rose sharply on Friday, led by chip and AI firms as investors brushed off conflicts escalating between the US and Iran, with the spotlight on the closely watched the debut.

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. But it beat out Saudi Aramco's 2019 $25.6 billion debut in the Gulf.

Dilin Wu, research strategist at Pepperstone, told AFP that the pricing says clearly that "the AI memory cycle is real, the earnings are real".

Wu earlier called the listing "a huge development that should broaden the capital base for the memory sector".

SK hynix shares jumped 2.7 percent on Seoul's Kospi index following the announcement.

The company's market capitalization on the Kospi soared past $1 trillion in May.

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.

South Korea's Samsung and SK hynix are among the global dominators for the advanced components known as high-bandwidth memory that are used in AI servers alongside other data-crunching semiconductors.

MS Hwang, an analyst from Counterpoint Research, said SK hynix wants to triumph over Samsung in the red-hot memory chip market.

"It has demonstrated until recently, the company is now planning to take the lead in terms of volume as well," Hwang said.

New plan

SK hynix said on Friday it plans to use the proceeds from the offering to fund construction of the first fabrication plant at a new semiconductor cluster in Yongin near Seoul, and 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 (about $530 billion) 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 to a deal on bonuses.

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