SK Hynix to raise $29.4B in US listing: How it may impact the AI memory chip trade

South Korean memory chip giant SK Hynix said on Wednesday that it plans to raise up to $29.4 billion through a US stock market listing, potentially marking the largest American Depositary Receipt offering ever and underscoring investor appetite for artificial intelligence-linked stocks.

If completed at the upper end of the proposed range, the offering would surpass Alibaba's $25 billion US debut in 2014 and become the largest US listing by a Korean company.

The listing comes at a time when SK Hynix has emerged as one of the biggest beneficiaries of the AI boom.

The company, a major supplier of high-bandwidth memory chips used in Nvidia's AI processors, is now valued at about $1.2 trillion.

Its shares have surged more than 280% this year and recently overtook Samsung Electronics to become South Korea's most valuable listed company.

It is only the second Korean company after Samsung to cross the $1 trillion market capitalisation threshold.

Implications of listing in the US

Analysts say the company's decision to list in the US is aimed at narrowing the valuation discount historically attached to Korean equities and positioning SK Hynix directly alongside global semiconductor peers such as Micron.

A Seoul-based semiconductor analyst told TechCrunch in March that the US listing could help address a long-standing valuation gap.

"SK hynix's U.S. listing could help close a long-standing valuation gap with global peers. Despite having comparable or in some areas stronger production capacity than U.S.-based chipmakers, the Korean company has historically traded at a discount, partly due to its primary listing in Korea."

Analysts believe the move could also support valuations of SK Hynix's Korea-listed shares.

"The most attractive benefit for investors is that SK Hynix will trade on Nasdaq alongside rival Micron, giving the company an opportunity to be re-rated in the US market," said Ryu Young-ho, senior analyst at NH Investment & Securities.

"That could also be reflected in its Korea-listed shares as investors increasingly link the two valuations."

CLSA Senior Analyst Sanjeev Rana said expectations surrounding the US listing have already contributed to the stock's rally.

"If they can get at least a valuation multiple similar to Micron, for example, then the local shares also need to reflect that, so that kind of expectation is there," Rana said in a Reuters report.

"I wouldn't be surprised if this rally continues."

The listing also carries broader strategic implications.

By debuting on Nasdaq, SK Hynix will gain access to deep pools of capital and become part of a market that increasingly views memory chips as critical AI infrastructure rather than cyclical hardware products.

The move could also trigger a wave of passive investment flows, as technology-focused exchange-traded funds and index funds that track US benchmarks would be required to add SK Hynix shares to their portfolios.

Potential challenges for Micron

SK Hynix said the proceeds from the ADR listing will be invested entirely into expanding manufacturing capacity.

The company plans to use the funds to construct new chip fabrication plants in South Korea and purchase advanced semiconductor manufacturing equipment, including extreme ultraviolet scanners produced by Dutch equipment maker ASML, whose shares rose 1.1% on Wednesday.

The spending plans reflect expectations that demand for high-end memory chips used in AI data centres will remain robust over the coming years.

The listing may also increase competitive pressures on Micron.

First, since SK Hynix plans to use the entire amount raised to expand manufacturing capacity and acquire new equipment, higher production volumes could strengthen its competitive position and potentially allow it to lower prices.

Second, the ADR listing gives global investors another way to gain exposure to the memory chip industry.

Some investors may diversify their holdings across both companies or rotate funds out of Micron and into SK Hynix.

MU shares have gained 269% this year despite a 13% decline on Tuesday, when concerns about the sustainability of aggressive AI spending triggered a broader selloff in semiconductor stocks.