SK Hynix seeks access to AI investors in $29 billion U.S. listing |
SK Hynix seeks access to AI investors in $29 billion U.S. listing
This week’s $29 billion US stock-market listing for SK Hynix Inc. may be the biggest-ever first-time share sale by a foreign company, but it isn’t just about raising cash. It’s also about competing in the hottest corner of the global stock market — memory chips used in AI computing.
For years, the South Korea-based semiconductor manufacturer has traded at a discount to its chief US-based rival, Micron Technology Inc. Tapping into the world’s deepest equity market and its frenzy for all things related to artificial intelligence could help change that at a time when the companies that make memory chips and other equipment used in AI data centers are driving the performance of the S&P 500 Index.
“We are in a time of extreme enthusiasm about chip stocks,” said Daniel Morgan, senior portfolio manager at Synovus Trust Co., which owns Micron shares. “It’s a good time to go and get the US involved in your shares.”
Betting on SK Hynix has been difficult, if not impossible, for the majority of American investors. Like Micron, the second-best performer in the S&P 500 this year with a scorching 242% gain, the company is benefiting from soaring demand for high-bandwidth memory chips. But owning SK Hynix’s South Korea-listed shares outright means off-hours trading in the US. The other alternative is buying unsponsored American depositary receipts, or ADRs, over the counter. Not only are the unsponsored ADRs performing worse than SK Hynix’s South Korea shares, but liquidity is also severely limited, making trading them a challenge.
SK Hynix’s Nasdaq listing, which is expected on July 10, should change that and improve the company’s lagging valuation. The South Korean firm trades at 6.2 times estimated earnings over the next 12 months. Micron is currently at 7 times after the shares tumbled 14% last week, their worst performance since March, but it was over 11 times as recently as June 22.
“The offering targets........