SK Hynix, a South Korean memory chipmaker, announced plans to conduct a U.S. initial public offering, selling nearly 17.8 million shares. The company said it could raise around $28 billion if the shares sell well, based on its closing share price last Friday in Seoul. SK Hynix will offer American depositary receipts (ADRs), allowing U.S. investors to buy shares without trading on an overseas exchange. Each ADR represents a tenth of a common share and is expected to be priced on Thursday, with trading beginning on Friday.
The company is capitalizing on the AI-fueled demand for memory chips, with first-quarter revenues up nearly 200% compared to the same period last year. Its stock has risen about 260% this year due to the memory-intensive nature of AI systems. As hyperscalers like Amazon, Microsoft, Google, and Oracle expand their AI operations, the demand for high-bandwidth memory (HBM), DRAM, and NAND has surged, creating a shortage referred to as 'RAMageddon.' This shortage has led to price increases for Apple products, as the company faces supply constraints.
The situation has prompted South Korean tech companies, including SK Hynix and Samsung, to commit over $550 billion to expand manufacturing capacity. However, this investment carries risks, as memory needs for AI may evolve before new facilities are operational, potentially leading to oversupply and price drops. Despite these risks, Wall Street remains optimistic, viewing memory chipmakers as strong alternatives to companies like Nvidia.
Source: techcrunch
