SK hynix aims to raise $29B in ADR listing to fund chip rush

SK hynix is seeking to raise 45.45 trillion won ($29.4 billion) through the listing of American Depository receipts (ADR), tapping global investors to help finance a multibillion-dollar buildout of chip facilities amid the intensifying AI race. 

The ADR will be priced at 255,500 won per share and is scheduled to be traded on the Nasdaq market from July 10, though the amount is subject to change after bookbuilding, according to the chipmaker's regulatory filing on Wednesday. ADRs are securities that allow U.S. investors to trade shares of foreign companies on U.S. exchanges. A total of 17.79 million new shares will be issued to underlie the ADRs listed on the U.S. exchange.

SK hynix — the world’s second-largest memory chipmaker and a major supplier of Nvidia’s main high-bandwidth memory chips — said the proceeds will be used to build chip fabrication plants in Yongin, Gyeonggi, an advanced packaging fab in Cheongju in North Chungcheong and to purchase chipmaking equipment such as an Extreme Ultraviolet Scanner.

An ADR listing is expected to make it easier for SK hynix to attract investment from global institutional investors and exchange-traded funds. Some analysts expect the listing to lead to immediate buying from funds that currently hold its competitor Micron, which could trigger a sharp revaluation of SK hynix shares.

SK hynix said BofA Securities, Citigroup Global Markets, Goldman Sachs and JP Morgan Securities are managing the offering.

The ADR listing could be the largest such listing, breaking the $21.8 billion record set by Chinese e-commerce operator Alibaba when it listed on the New York Stock Exchange in 2014.

Industry observers see the ADR listing as part of SK hynix's efforts to embed itself in the U.S. AI ecosystem — having already established manufacturing and research and development ties, it is now extending its reach to capital markets.

SK hynix's ADR plans are parallel to those of semiconductor firms ASML and TSMC when they entered the U.S. capital markets in the 1990s.

SK hynix has been the major driver of the Kospi, rallying 280 percent since the beginning of the year based on the closing price. On Monday, it outpaced Samsung Electronics to become Korea’s largest company by market capitalization based on common shares. Its market capitalization as of Wednesday was 1.84 quadrillion won, compared to Samsung Electronics’ 1.99 quadrillion won.

BY JIN MIN-JI [[email protected]]