SK Hynix Raises $26.5B in Record U.S. Listing

SK Hynix completed a record-breaking U.S. listing on Friday, raising $26.5 billion at an initial public offering price of $149 per American Depositary Share (ADS). The South Korean chipmaker's Nasdaq debut was more than seven times oversubscribed, reflecting strong investor interest in the company's growth prospects amid surging demand for AI chips.

The successful listing marks a significant milestone for SK Hynix, which plans to use the funds to finance new factories and equipment to meet increasing AI chip demand. The company will list through 177.9 million depositary shares, each representing one-tenth of a usual share. According to The Guardian, SK Hynix's listing beat out Saudi Aramco's 2019 $25.6 billion debut and the $21.8 billion raised by Chinese tech firm Alibaba.

Despite strong demand, concerns about market volatility and AI-driven chip stock fluctuations persist. Samsung Electronics reported a nearly 19-fold jump in second-quarter operating profit to $58.4 billion, but its shares fell in South Korea due to investor worries about sustaining high earnings levels amid AI-driven market volatility. Analysts noted that while Samsung's strong earnings were expected, the market had already priced in much of the good news.

The KOSPI benchmark index in South Korea closed down 4.9%, with chipmakers Samsung Electronics and SK Hynix leading the decline. Analysts attributed the selloff to profit-taking and renewed worries about AI demand sustainability. Meanwhile, SpaceX's addition to the Nasdaq-100 is anticipated to unleash billions in passive buying, with over $587 billion benchmarked in funds tracking the index.

According to Reuters, dollar-selling related to SK Hynix's U.S. share sale sent the South Korean won to a more than one-month high. The chipmaker launched a U.S. share sale to raise $28.66 billion, drawing significant interest from major investors. SK Hynix is expected to bring U.S. dollars into the country by around July 15, converting part of the funds into the won.

SK Hynix's planned Nasdaq ADR listing has raised both hopes and concerns. While it allows the company to secure capital and gain broader recognition for its growth prospects in artificial intelligence memory, there are worries about dilution for existing shareholders. The offering will be conducted through the issuance of new shares, which could put short-term pressure on the stock despite positive investor sentiment about SK Hynix's AI memory competitiveness.

The selloff in chip stocks was not limited to South Korea. U.S. memory makers Sandisk and Micron Technology dropped about 7% and 5%, respectively, while the iShares Semiconductor ETF slumped about 5%. Intel, Marvell Technology, Lam Research, and Applied Materials also saw significant declines.

Despite the market downturn, some analysts remain optimistic about the long-term prospects of the chip sector. They expect memory market undersupply to continue through next year, driven by AI demand. However, concerns about valuation and future earnings sustainability have tempered investor enthusiasm.