SK Hynix ADRs surge 13% on $26.5bn US debut

SK Hynix American Depositary Receipts surged 13% in their Nasdaq debut after the South Korean memory chipmaker raised $26.5 billion. The ADRs opened at $170, a strong premium over the $149 offering price. That issue price itself was set at a 2.7% premium to the stock's three-day average trading price in Seoul, indicating aggressive initial positioning by bookrunners.

The enormous demand, with the offering reportedly subscribed more than seven times, signals that institutional appetite for artificial intelligence infrastructure remains intact. This validation arrives despite a recent and sharp pullback in semiconductor equities. SK Hynix's domestic shares in Seoul have declined roughly 25% from their record high reached just two weeks ago.

However, the underlying corporate fundamentals continue to reflect an AI-driven supercycle. As a dominant supplier of high-bandwidth memory (HBM) chips essential for AI processors and data centres, SK Hynix has become a primary beneficiary of massive capital expenditure from technology giants. Severe supply shortages for these advanced memory components have pushed chip prices sharply higher, propelling SK Hynix's overall market valuation more than sevenfold over the past year. The stock remains up approximately 630% from its level a year ago.

Executing a US listing serves a dual strategic purpose for South Korea's second most valuable company. The proceeds will fund the construction of new manufacturing facilities needed to alleviate HBM supply bottlenecks. Simultaneously, a Nasdaq presence grants SK Hynix direct access to the world's largest pool of equity investors.

This expanded access could prove critical in closing a persistent valuation discount with its US-based rival, Micron. Despite leading the market in HBM technology, SK Hynix currently trades at roughly 5.8 times forward earnings. Micron, which has seen its own stock climb 711% over the past 12 months on the back of similar AI memory demand, commands a multiple of approximately 7 times.

Ranked as the second-largest US share sale behind SpaceX's record initial public offering last month, the SK Hynix transaction offers a clear signal to broader markets. While near-term momentum in semiconductor stocks has cooled as investors question the sustainability of AI spending, major institutions are still willing to deploy historic levels of capital for the indispensable "picks and shovels" providers of the AI revolution.