SK Hynix Lists on Nasdaq in $29 Billion Offering

SK Hynix, the world's second-largest memory chipmaker, is preparing to list on Nasdaq in an offering expected to raise about $29 billion. It could become the largest initial listing of a foreign company's shares on a US exchange in history, as the company seeks above all to reach investors looking to bet on the AI boom.

Proceeds from the offering are meant to fund construction of two new factories in South Korea to meet growing demand for memory used in data centers that train and run large language models. SK Hynix has posted record orders from AI card and server makers for months, and its HBM memory goes into, among other things, Nvidia's chips.

Why Nasdaq, not just Korea

The company has long been listed in Seoul, but management decided on an additional listing in New York to open up to American capital at the height of enthusiasm for AI-related stocks. SK Hynix has historically traded at a discount to its main rival, US-based Micron, despite comparable exposure to the same memory market.

This is a good time to get US investors involved in your stock - Daniel Morgan, senior portfolio manager, Synovus Trust Co.

According to data cited by Fortune, SK Hynix currently trades at 6.2 times projected earnings, while Micron trades at a multiple of 7. Micron itself has gained 242 percent this year, making it the second-best-performing stock in the S&P 500.

The memory market as an AI boom barometer

Analysts see the SK Hynix listing as a kind of stress test for the entire AI-related market. The company is Nvidia's main supplier of HBM memory, so its valuation reflects expectations for continued spending by hyperscalers on AI infrastructure.

Recent weeks, however, have brought warning signs. Comments suggesting a slowdown in production of memory for AI applications triggered one of the worst sessions in the history of South Korea's Kospi index, dragging down stock markets worldwide.

Sell-offs like this have so far only happened during bear markets - James Reilly, Capital Economics

Reilly described the current volatility as evidence of excessive speculation, and Bank of America warned that shares could fall further, maintaining its year-end S&P 500 forecast of 7,100 points, about 5 percent below recent levels. The bank's analysts speak bluntly of an extreme level of speculation in the market.

Risk of overinvestment

The memory industry has been known for decades for its boom-and-bust cycles, and massive investment in new factories carries the risk of oversupply if AI demand slows even temporarily. Hyperscaler spending on AI infrastructure could reach a trillion dollars a year this year, with some of it already financed through debt issuance rather than just cash on hand.

Memory shortages are already translating into higher prices for consumer electronics, visible also in DRAM module prices worldwide. SK Hynix's Nasdaq listing will show whether investors still believe in continued growth in demand for AI memory, or are starting to brace for a correction.

What this means for the Polish market

For Polish companies buying servers and computer hardware, the situation in the memory market directly affects prices - higher demand for HBM from AI data centers is also pushing up memory costs in the consumer and business segments. The scale of capital SK Hynix wants to raise to expand production capacity suggests that price pressure could persist for a while longer, until new factories come online toward the end of the decade.

Sources: SK Hynix seeks access to AI investors in $29 billion US listing (fortune.com), SK Hynix stock's US listing could signal whether the market can still boom-or is headed for a bust (fortune.com)