US investors will soon get access to SK Hynix, another memory maker riding the AI boom
Quick Answer
SK Hynix plans a U.S.
Quick Take
IPO to sell 17.8 million shares, potentially raising $28 billion. The company is benefiting from a surge in AI-driven memory demand, with revenues up nearly 200% year-over-year and stock prices soaring 260% this year, amidst a critical memory chip shortage termed 'RAMageddon.'
Key Points
- SK Hynix will offer American depositary receipts (ADRs) representing one-tenth of a share.
- The IPO pricing is expected on Thursday, with trading starting Friday.
- The memory chip shortage is impacting prices for products like Mac computers and iPads.
- South Korean firms plan to invest over $550 billion in new manufacturing capacity.
- Micron's stock has surged nearly 700% in the past year due to AI demand.
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~2 min readSouth Korean memory chip maker SK Hynix, rival to Samsung and U.S.-based Micron, is planning to sell nearly 17.8 million shares in a U.S. IPO, the company said on Monday. Should its shares sell well (and there’s indication that they will), the company could raise around $28 billion, based on SK Hynix’s closing share price last Friday in Seoul, Bloomberg reports.
SK Hynix will be offering American depositary receipts (ADRs), a type of certificate that lets U.S. investors buy a foreign stock without trading directly on an overseas exchange. Each ADR will represent a tenth of a common share. It is expected to price those securities on Thursday and begin trading on Friday.
Like Micron, SK Hynix is riding an AI-fueled boom credited to AI in both sales and stock price. Its first quarter revenues were up nearly 200% over the same quarter last year, it said, and its stock is up about 260% so far this year. This is because systems that run AI are very memory intensive. As hyperscalers like Amazon, Microsoft, Google, and Oracle race to build out so-called AI factories, and as new AI data centers multiply nationwide, demand has outpaced supply, creating a shortage of memory chips — including High Bandwidth Memory (HBM), DRAM, and NAND (the different types of chips that store and move data inside AI systems). The situation has been called “RAMageddon.” Apple executives said the shortage is forcing it to raise prices on Mac computers and iPads.
South Korean tech companies, led by SK Hynix and Samsung, have vowed to spend over $550 billion on building out new manufacturing capacity to keep up. That’s actually a risky venture. By the time those facilities are built, memory needs for AI may change, leaving them with more supply than the market wants and, potentially, crashing prices. But for now, Wall Street is looking for another Nvidia and memory chip makers are among the closest options that they have.
Micron, the closest U.S. comparison, has shot up nearly 700% over the past year to a more than $1 trillion valuation, fueled by record AI-driven memory demand and revenue.
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— Originally published at techcrunch.com
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