The South Korean memory chip giant is preparing to announce the terms of its listing on the Nasdaq, aiming for a record fundraising in the technology sector.
South Korean memory chip giant SK hynix is due to announce on Thursday the financial terms of its listing on Wall Street, which could constitute one of the largest stock market fundraising ever. The group, which notably supplies the American semiconductor champion Nvidia, the most valuable company in the world, has seen its profits and its share price soar thanks to the frantic global demand for artificial intelligence (AI). SK hynix plans to issue the equivalent of 17.8 million new shares on Friday on the Nasdaq, the Wall Street index dedicated to technology stocks. The group hopes to raise 43 trillion won ($28 billion), a target revised downward from the 45 trillion won initially announced.
A major operation driven by the rise of AI
SK hynix is already listed on Seoul’s Kospi index, where its market capitalization surpassed $1 trillion in May. A threshold also reached by its South Korean rival Samsung Electronics and the American Micron, these three companies having been propelled by the rise of AI to join a very exclusive club of a dozen companies. SK hynix, Samsung and Micron dominate the market for components known as high-bandwidth memory (HBM), widely used in AI servers.
Despite recent volatility in global technology stocks, as investors wonder when their colossal spending will pay off, demand for SK hynix shares on Wall Street could outstrip supply, pushing prices to levels rarely seen for such a deal. The amount raised could rival the IPO of Saudi Aramco ($25.6 billion in 2019), without however approaching the recent record of the American SpaceX, at $85.7 billion. For Dilin Wu, analyst at Pepperstone, this operation is “a major step forward which should broaden the capital base of the memory sector”.
Strategy and investments in the face of competition
At the same time, the shortage of memory chips used in consumer electronics is driving up their prices. SK hynix is now seeking to supplant Samsung in this market, explains MS Hwang, analyst at Counterpoint Research. “In addition to the leadership it demonstrated until recently in the field of HBM, the company now plans to take the lead in terms of volumes. The use of funds from its listing in the United States can support such an objective,” he explains.
For its part, SK hynix indicated that the proceeds from this fundraising would be used to finance new chip factories, in order to alleviate shortages. The company is participating, alongside Samsung, in a colossal public-private investment of 800,000 billion won (455 billion euros) for a new semiconductor manufacturing hub in the southwest of South Korea.
