SK Hynix raises $26.5B in the biggest foreign IPO in US history, is urged to build new US fabs

The AI spot roar conscionable produced its biggest Wall Street infinitesimal yet. SK Hynix, a South Korean representation spot giant, said Friday it has raised $26.5 cardinal (KRW 40 trillion) successful its US marketplace debut.

SK Hynix sold 177.9 cardinal American depositary shares (ADRs) astatine $149 each, structured truthful US investors tin bargain successful astatine astir a tenth of what a afloat stock costs successful Seoul. This deal, the largest-ever US debut by a non-American company, topped Alibaba’s $25 cardinal IPO successful 2014.

SK Hynix begins trading connected the Nasdaq today, Friday, July 10th, nether the impermanent ticker SKHYV. Regular trading opens Monday, July 13th, erstwhile the ticker officially becomes SKHY. So far, US investors are lapping it up. The stock opened astatine 14% implicit its IPO price, and the terms was inactive rising successful aboriginal trading connected Friday.

This adjacent arsenic it priced its US shares astatine a 2.7% premium to its ain three-day mean backmost location successful Seoul, according to its Korea Stock Exchange filing. Yet, request for the offering was reportedly more than 7 times the disposable shares, per media reports.

That’s particularly astonishing considering Korean companies person agelong traded astatine a discount to their planetary peers. That valuation spread is called the Korea Discount. Investors often mention factors specified arsenic analyzable firm governance structures, debased shareholder returns, regulatory uncertainty, and geopolitical risks related to North Korea to warrant wherefore companies from that state don’t bid higher stock prices.

But SK Hynix intelligibly isn’t suffering from the Korea Discount and that’s due to the fact that SK Hynix makes representation chips, including high-bandwidth representation (HBM). HBM is simply a cardinal constituent of AI GPUs processors. And close now, Nvidia relies connected SK Hynix arsenic 1 of its superior suppliers.

Per its filing, the wealth raised from anxious US investors volition spell to 3 places: a caller fab successful South Korea (being built present to code the worldwide shortage of representation origin by AI); a caller packaging installation successful that country; and EUV scanners, the machines that marque next-generation chips possible.

Meanwhile, US Commerce Secretary Howard Lutnick stopped by a Micron lawsuit Thursday with a connection for the broader spot industry, not conscionable for US representation shaper Micron (who is 1 of SK Hynix’s biggest competitors). Lutnick reportedly said he’s already successful talks with Samsung (the 3rd large representation maker, worldwide) and SK Hynix astir gathering caller factories successful the U.S. The thought being not to fto South Korea proceed to beryllium the state that dominates this important tech.

Micron, naturally, is in. It announced it plans to put $250 cardinal successful caller US manufacturing, a committedness the U.S. representation spot institution says volition make much than 90,000 jobs and support leading-edge spot accumulation connected American soil.

The timing of Lutnick’s petition is notable beyond this US IPO for SK Hynix: some Korean chipmakers just pledged much than $550 billion for caller manufacturing concern successful South Korea.