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SK Hynix IPO: South Korean chipmaker SK Hynix has pulled off the largest first-time US listing ever by a foreign company.
The memory chip giant raised $26.5 billion in its Wall Street offering. That figure surpasses Alibaba's previous US IPO record, according to Bloomberg data.
Massive Investor Demand
The offering included 177.9 million American depositary shares, or ADS. Each ADS represents one-tenth of a common share, equal to 17.79 million shares total. Investor demand reached seven times the number of available shares, Reuters reported.
SK Hynix priced the ADSs at $149 each on Thursday. The stock begins trading Friday on the Nasdaq under the ticker SKHYV. It will then shift to regular trading under the symbol SKHY starting Monday.
A Bet on the AI Boom
SK Hynix supplies memory chips to Nvidia. The IPO proceeds are expected to fund expanded manufacturing capacity. Demand for memory and storage chips has surged alongside the global buildout of artificial intelligence infrastructure.
The US listing also gives American investors a more direct way to buy into South Korea's memory chip rally. SK Hynix shares on the Korea Exchange have jumped 174% over the past six months. They're up 634% over the past year.
Still, the sector isn't immune to swings. Memory stocks slid into a bear market on Tuesday, according to Yahoo Finance's Jared Blikre.
Why Memory Chips Are in Such High Demand
AI data centers rely on storage chips to hold and retrieve the information needed to run AI models. But processors like Nvidia's graphics processing units don't pull data from every part of a program at once. Doing so would slow them down.
High-bandwidth memory, or HBM, solves that problem. It stores the most critical data directly next to the processor, allowing for much faster performance.
Three companies dominate the HBM and storage chip market: SK Hynix, Samsung, and Micron. SK Hynix holds a 56.4% share of the HBM market, making it the current leader, according to its filing with the Securities and Exchange Commission. All three companies supply Nvidia. Until now, American investors have had few direct options to buy shares of SK Hynix or Samsung on US exchanges.
Supply Crunch Could Last Years
Industry analysts say the chip shortage may persist into 2030. Building new manufacturing facilities takes years to complete.
The memory industry has historically cycled through booms and busts. Patrick Moorhead, founder and CEO of Moor Insights & Strategy, pointed to a recent downturn as an example.
He noted that memory makers were once selling products at a loss, driving negative gross margins. Companies responded by sharply cutting capital spending, which set the stage for today's shortage.
Chipmakers Lock In Long-Term Deals
Micron recently began signing customers to long-term supply agreements. These deals require clients to commit to purchasing a set volume of chips annually, backed by a large upfront payment.
Micron chief business officer Sumit Sadana told Yahoo Finance that most new agreements now span five years. Previous contracts typically lasted only one year.
It remains unclear whether these longer-term deals will be enough to prevent another boom-and-bust cycle once the current memory shortage eases.
Visual Disclaimer: This is an AI-generated illustrative portrait. It is used for creative representation and does not depict a real-time event. Created by AD News Live.
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