Prime Highlights
- SK Hynix plans to sell 17.8 million ADRs in the US in a deal that could raise about $28 billion.
- Strong AI-driven demand for memory chips has boosted the company’s revenue growth and share price.
Key Facts
- SK Hynix is South Korea’s second-largest memory chip maker and a major supplier of DRAM, NAND and high-bandwidth memory chips.
- American depositary receipts (ADRs) allow US investors to trade shares of foreign companies without buying stocks directly on overseas exchanges.
Background
South Korean memory chipmaker SK Hynix plans to sell nearly 17.8 million American depositary receipts (ADRs) in the United States, aiming to tap growing investor interest in companies benefiting from the artificial intelligence (AI) boom.
One-tenth of a common share will be represented by each ADR. The company expects to price the offering later this week, with trading scheduled to begin shortly after. Based on SK Hynix’s closing share price in Seoul, the offering could raise about $28 billion if fully subscribed.
The planned listing comes as demand for memory chips continues to rise due to rapid investment in AI infrastructure. Technology companies are expanding data centres and AI computing capacity, increasing the need for memory products such as high-bandwidth memory (HBM), DRAM and NAND. Industry demand has remained higher than supply, supporting strong growth for memory chip manufacturers.
SK Hynix reported that its first-quarter revenue almost tripled from a year earlier, while its share price has gained about 260% this year. There has been positive demand for chips used in AI.
However, with increased production capacity comes the risk that there might not be sustained growth in the demand for AI chips once the plants begin operations. This is because investors have been interested in investing in firms dealing in memory chips due to the continued increase in spending on AI. The move to list in the U.S. market will be good for the firm’s expansion strategy.