SK Hynix raises $26.5 billion in U.S. offering. What to know about the stock.

By Britney Nguyen

U.S. investors are about to get another straightforward way to play the red-hot market for memory chips

SK Hynix will list its ADRs on the Nasdaq on Friday.

South Korean memory-chip giant SK Hynix is getting one step closer to becoming a household name in the U.S.

The company will list its American depositary receipts (SKHY) on the Nasdaq on Friday, giving U.S. investors another way to buy into one of the hottest areas of the market this year. The offering raised roughly $26.5 billion at a price of $149 a share late Thursday, Reuters reported.

SK Hynix (KR:000660) is South Korea's second-most valuable company, after Samsung Electronics (KR:005930), with a $1 trillion market capitalization on the Korea Exchange KR:180721. Both SK Hynix and Samsung have seen their Korea-listed shares soar so far this year, as demand for memory chips has outpaced supply and led to massive price hikes.

The U.S. listing "is a clear positive for U.S. and global funds that have wanted direct exposure to SK Hynix, but have historically had to express the memory trade through proxies," David Fetherstonhaugh, an investment strategist at VistaShares, told MarketWatch. Demand for SK Hynix shares is clear, he said, noting that the deal was reportedly seven times oversubscribed.

SK Hynix will trade under the ticker symbol "SKHY," and had been looking to raise $29 billion before a downturn in the Korean market. The company operates chip fabs in South Korea and China, and is currently building an advanced chip-packaging facility in West Lafayette, Ind., that will be supported by $458 million in funding from the Biden administration's U.S. Chips and Science Act.

Fetherstonhaugh expects some short-term pressure on the stock during the first days of trading as capital moves from exchange-traded funds and other proxies into the ADRs, "colliding with volatility already running through U.S. [semiconductor stocks]," he said in emailed comments.

If SK Hynix's ADRs trade richly relative to local shares, "that is a sign of pent-up U.S. demand for direct exposure," Fetherstonhaugh said. It could also mean investors are "paying for the convenience of the U.S.-listed wrapper."

Still, the U.S. listing "should broaden the shareholder base and potentially make the stock even more central to how global investors trade semis," he added.

SK Hynix, Samsung and U.S.-based Micron Technology (MU) are the world's top producers of high-bandwidth memory, which involves stacking multiple dynamic random-access memory die and which is essential for powerful AI chips such as Nvidia's (NVDA) graphics processing units. The silicon-intensive chips have contributed to the shortage of DRAM, which is also used in consumer devices such as laptops, smartphones and graphics cards.

Don't miss: Micron was started by a few guys in an Idaho basement. How it wound up at the center of the AI boom.

Shay Boloor, chief market strategist at Futurum Equities, said SK Hynix stands apart from its peers as "the cleanest public-market bet on the HBM bottleneck with deeper Nvidia-linked exposure," as well as "more HBM purity than Samsung and stronger current HBM leadership than Micron."

According to its filing with the Securities and Exchange Commission, SK Hynix is the leader in HBM chips with 56.4% of the market, while it is second in the market for DRAM and NAND, the company said, citing the International Data Corporation.

While Samsung offers scale and Micron has the most direct exposure for U.S. investors, "SK Hynix gives you the most direct upside if HBM scarcity lasts longer than expected, while also carrying more downside if the memory cycle eventually turns, which might not happen until at least 2028," Boloor said in emailed comments.

SK Hynix started as Hyundai Electronics in 1983, at which point it was a subsidiary of Hyundai. The company merged with LG Semicon in 1997 during a downturn in the memory cycle, then eventually became Hynix Semiconductor in 2001. In 2012, SK Hynix took on its current name after SK Telecom acquired a controlling stake.

Despite being initially hesitant to add capacity out of fear that demand could slow down in the historically cyclical memory industry, SK Hynix and its peers have announced plans to build out chip manufacturing to address tight supply - though that extra capacity is not expected to come online until at least the end of next year.

Bill Birmingham, managing director of REX Financial, told MarketWatch that the focus of this deal will not be on price discovery like it would be with a traditional initial public offering. Rather, the deal serves as "a referendum" on three points - how long memory shortages last, whether AI-driven demand is durable, "and whether a U.S. listing will settle the market debate over what the right valuation metric and range is for the memory group," he said in emailed comments.

Investors should focus on what contract pricing looks like for 2027, Birmingham noted. Memory-chip makers have turned to long-term agreements that both allow customers to secure future supply and offer improved visibility into demand.

-Britney Nguyen

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