With US$26.5 billion in hand, will SK Hynix break through?
After Musk’s SpaceX, another giant IPO is coming. Global storage leader SK Hynix will be listed on Nasdaq tonight in the form of ADR, with a financing amount of at least US$26.5 billion, making it one of the three largest IPOs in the world.
After Musk’s SpaceX, another giant IPO is coming. Global storage leader SK Hynix will be listed on Nasdaq tonight in the form of ADR, with a financing amount of at least US$26.5 billion, making it one of the three largest IPOs in the world. However, technology stocks have experienced a significant correction in recent times. Will SK Hynix have a breakout like SpaceX? The ADR issuance price is higher than the underlying stock In this issuance of SK Hynix, the issuance price of each ADR (corresponding to 0.1 common shares) is US$149, a small premium of 3.1% compared to its underlying shares; the basic fund raised is US$26.5 billion, setting a record for foreign companies' IPO fundraising in the United States and one of the top three IPOs in the world. If the over-allotment option is exercised in full, the total amount raised will reach US$30.5 billion, ranking second in global history. The funds raised will be invested in SK Hynix's AI storage global production capacity expansion, focusing on two major projects, the Yongin HBM (high-bandwidth memory) exclusive factory in South Korea and the Indiana advanced packaging base in the United States. It will simultaneously deepen collaborative research and development with TSMC on advanced processes and chip packaging, and improve the global supply chain layout. The capital market views SK Hynix's listing in the United States as a signal that the AI storage market is spreading from the "NVIDIA main line" to the "memory and supply chain main line". For U.S. stocks, after its listing, it may become a new weighted trading target in the semiconductor sector, and affect the rebalancing of related ETFs, Korean market funds, and global AI hardware allocation funds. According to media reports, SK Hynix’s U.S. IPO has been oversubscribed by more than 7 times, attracting participation from global long-term funds, technology-themed funds, sovereign wealth funds, and international investors focusing on the Asian market. Behind the craze is the irreplaceable core value of the storage track in the era of AI computing power. However, there has been a significant correction in semiconductor stocks recently, with the Korea Composite Index once falling by more than 20%, which may also affect the short-term trend of SK Hynix. Currently, most institutions are optimistic about SK Hynix. A Goldman Sachs research report pointed out that the company's HBM has a global market share of over 57%, long-term contract orders are locked until 2028, and a 72% operating profit margin in the first quarter of 2026 will form a fundamental safety cushion; superimposed on the long-term valuation discount of Korean stocks, the ADR listing is expected to be included in the Philadelphia Semiconductor Index and the Nasdaq 100, and passive index funds will form continuous buying. The issue price is only 3.1% higher than the Korean stock price, and there is no obvious pricing bubble. Junsung Kim, a storage industry analyst at SemiAnalysis, a well-known semiconductor and artificial intelligence research institution, believes that after the IPO is completed, SK Hynix ADR will soon narrow the valuation gap with Micron Technology. Junsung Kim pointed out, "The initial stage of this valuation restoration is likely to be manifested in a certain trading premium for ADRs relative to local Korean ordinary shares. In the future, whether SK Hynix ADRs and Korean ordinary shares can be converted into each other will become a key factor in promoting the company's overall valuation re-rating. I predict that the company may allow a certain scale of two-way conversion in the future." Cyclical risks deserve attention Morgan Stanley warned of mid- to long-term risks, the core of which comes from storage cycle constraints: multiple manufacturers are simultaneously expanding HBM production, and high-end storage capacity will be released intensively after 2028. If cloud manufacturers’ capital expenditures are less than expected, storage prices and profits will fall rapidly, and performance inflection points will suppress valuations. Secondly, the stock has increased by more than 700% in the past year, and some of the benefits have been realized in advance. The large new shares of US$26.5 billion have brought equity dilution and liquidity diversion; the superimposed ADR and Korean stock conversion mechanisms are asymmetric, and fluctuations in arbitrage funds will amplify stock price fluctuations. Storage is an asset-heavy industry, with huge investment in wafer plant construction and equipment procurement, and a production capacity construction cycle of two to three years. Once the demand side changes, supply and demand can easily form a mismatch, which will lead to a complete cycle of price increases and production expansion, oversupply, price cuts and production cuts, and demand recovery. In the past, when the demand for PCs and mobile phones was weak, the prices of DRAM and NAND plunged sharply, the profits of industry companies shrank significantly, and the fluctuation characteristics were very prominent. Looking back on the development history of SK hynix, this point is clearly demonstrated. SK hynix is “reborn after death”
SK Hynix was formerly Hyundai Electronics founded by Hyundai Group in 1983. It was deeply involved in the DRAM track in the early days. It rose rapidly through technical cooperation and industry mergers and acquisitions. In the 1990s, it became the first echelon of global storage. After merging with LG Semiconductor, its strength was once comparable to industry giant Samsung. Icheon Factory when Hyundai Electronics Industry was established in 1983 (SK hynix official website) However, rapid expansion has laid huge hidden dangers. The huge merger and acquisition debt was compounded by the 1997 Asian financial crisis and the bursting of the Internet bubble in 2000. Storage prices plummeted, and the company's diversified businesses continued to suffer losses, completely falling into despair. In 2001, Hyundai Group divested itself of its semiconductor business, renamed the company Hynix, and placed it under the custody of creditor banks, starting a decade-long road to survival. At that time, Hynix's debt was as high as US$14 billion, its asset-liability ratio exceeded 206%, its cash flow was almost exhausted, and it was struggling to pay employees' salaries. It was labeled a "junk stock" and "bad debt black hole" by the capital market, and South Korea's major chaebols shunned it. Hynix then embarked on the path of extreme weight loss and debt restructuring. It has written off nearly $8 billion in debt through debt-for-equity swaps, divested non-core businesses such as panels and power semiconductors, shut down inefficient production lines, streamlined personnel, strictly controlled expenses, and concentrated all resources on its main DRAM storage business. Under the leadership of the then CEO Yu Yiji, the company established the line of "slimming down to survive, focusing on the main business, and steadily recovering blood". While repaying debts and reducing burdens, it adhered to core research and development and struggled to survive on the break-even line. Bucking the trend and betting on HBM to achieve today’s success In 2012, Hynix once again encountered a rupture in its capital chain. SK Group Chairman Choi Tae-won made a decision that shocked the Korean business community. He spent 3.4 trillion won (approximately US$3 billion) to acquire a controlling stake in Hynix, and the company officially changed its name to SK Hynix. The capital transfusion allowed the company to start to gain a firm foothold. In 2014, the company launched the world's first HBM high-bandwidth memory (high-end special DRAM) based on TSV through-silicon via stacking technology. At that time, cloud computing had not yet become popular, and the AI industry was still in its infancy. HBM was only used in small quantities for high-end graphics cards and supercomputers. The cost was high, the market was small, and orders were scarce. The industry generally judged that its payback cycle was as long as 8 to 10 years, and it was a useless track with an imbalance of input and output. The financial department issued risk warnings many times. In the face of industry consensus and internal doubts, the management bucked the trend and increased investment, allocating 70% of R&D funds and 60% of new wafer production capacity to HBM R&D, with a special investment of 100 billion won every year. Even if DRAM profits are squeezed and report income is suppressed in the short term, technological iterations have never been interrupted. The management predicts in advance that traditional computing architecture has a "memory wall" that is difficult to break through. When computing power explodes in the future, high-speed HBM will become a core requirement for AI training. After ten years of hard work, SK Hynix has iterated on five generations of HBM products, developed its own batch reflow packaging process, overcome key problems such as ultra-thin wafer stacking, heat dissipation, and mass production yield, and established technical barriers that integrate patents, processes, and mass production. (Source: SK hynix official website) In 2020, the company spent another US$9 billion to acquire Intel's NAND flash memory and SSD business, launched the high-end storage brand Solidigm, supplemented the shortcomings of the flash memory business, formed three core product lines of DRAM, HBM, and NAND, and transformed from a single memory manufacturer to a comprehensive storage solution service provider. With the advent of ChatGPT in 2022, global demand for AI computing power will explode, and high-end HBM will be in short supply. SK Hynix, which has been deployed for ten years in advance, has formed a first-mover advantage and has become one of the few manufacturers in the world to stably mass-produce HBM3E. It is deeply integrated with NVIDIA and has captured more than 50% of the global HBM market share. AI high-end storage has become the company's first source of profit, which has also become the core driving force for the company's stock price rise in the past two years. Cyclical fluctuations in the storage industry have always existed. Can SK Hynix, which has stepped into the current trend of AI storage, hit another "HBM" in the next cycle? For investors, while chasing the trend, they also need to always maintain rationality and balance the risk-return ratio. (
SK Hynix was formerly Hyundai Electronics founded by Hyundai Group in 1983. It was deeply involved in the DRAM track in the early days. It rose rapidly through technical cooperation and industry mergers and acquisitions. In the 1990s, it became the first echelon of global storage. After merging with LG Semiconductor, its strength was once comparable to industry giant Samsung. Icheon Factory when Hyundai Electronics Industry was established in 1983 (SK hynix official website) However, rapid expansion has laid huge hidden dangers. The huge merger and acquisition debt was compounded by the 1997 Asian financial crisis and the bursting of the Internet bubble in 2000. Storage prices plummeted, and the company's diversified businesses continued to suffer losses, completely falling into despair. In 2001, Hyundai Group divested itself of its semiconductor business, renamed the company Hynix, and placed it under the custody of creditor banks, starting a decade-long road to survival. At that time, Hynix's debt was as high as US$14 billion, its asset-liability ratio exceeded 206%, its cash flow was almost exhausted, and it was struggling to pay employees' salaries. It was labeled a "junk stock" and "bad debt black hole" by the capital market, and South Korea's major chaebols shunned it. Hynix then embarked on the path of extreme weight loss and debt restructuring. It has written off nearly $8 billion in debt through debt-for-equity swaps, divested non-core businesses such as panels and power semiconductors, shut down inefficient production lines, streamlined personnel, strictly controlled expenses, and concentrated all resources on its main DRAM storage business. Under the leadership of the then CEO Yu Yiji, the company established the line of "slimming down to survive, focusing on the main business, and steadily recovering blood". While repaying debts and reducing burdens, it adhered to core research and development and struggled to survive on the break-even line. Bucking the trend and betting on HBM to achieve today’s success In 2012, Hynix once again encountered a rupture in its capital chain. SK Group Chairman Choi Tae-won made a decision that shocked the Korean business community. He spent 3.4 trillion won (approximately US$3 billion) to acquire a controlling stake in Hynix, and the company officially changed its name to SK Hynix. The capital transfusion allowed the company to start to gain a firm foothold. In 2014, the company launched the world's first HBM high-bandwidth memory (high-end special DRAM) based on TSV through-silicon via stacking technology. At that time, cloud computing had not yet become popular, and the AI industry was still in its infancy. HBM was only used in small quantities for high-end graphics cards and supercomputers. The cost was high, the market was small, and orders were scarce. The industry generally judged that its payback cycle was as long as 8 to 10 years, and it was a useless track with an imbalance of input and output. The financial department issued risk warnings many times. In the face of industry consensus and internal doubts, the management bucked the trend and increased investment, allocating 70% of R&D funds and 60% of new wafer production capacity to HBM R&D, with a special investment of 100 billion won every year. Even if DRAM profits are squeezed and report income is suppressed in the short term, technological iterations have never been interrupted. The management predicts in advance that traditional computing architecture has a "memory wall" that is difficult to break through. When computing power explodes in the future, high-speed HBM will become a core requirement for AI training. After ten years of hard work, SK Hynix has iterated on five generations of HBM products, developed its own batch reflow packaging process, overcome key problems such as ultra-thin wafer stacking, heat dissipation, and mass production yield, and established technical barriers that integrate patents, processes, and mass production. (Source: SK hynix official website) In 2020, the company spent another US$9 billion to acquire Intel's NAND flash memory and SSD business, launched the high-end storage brand Solidigm, supplemented the shortcomings of the flash memory business, formed three core product lines of DRAM, HBM, and NAND, and transformed from a single memory manufacturer to a comprehensive storage solution service provider. With the advent of ChatGPT in 2022, global demand for AI computing power will explode, and high-end HBM will be in short supply. SK Hynix, which has been deployed for ten years in advance, has formed a first-mover advantage and has become one of the few manufacturers in the world to stably mass-produce HBM3E. It is deeply integrated with NVIDIA and has captured more than 50% of the global HBM market share. AI high-end storage has become the company's first source of profit, which has also become the core driving force for the company's stock price rise in the past two years. Cyclical fluctuations in the storage industry have always existed. Can SK Hynix, which has stepped into the current trend of AI storage, hit another "HBM" in the next cycle? For investors, while chasing the trend, they also need to always maintain rationality and balance the risk-return ratio. (