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

The rise of AI chips just delivered the biggest Wall Street moment yet. SK Hynix, a South Korean memory chip giant, said Friday it raised US$26.5 billion (KRW40 trillion) in its US market debut.

SK Hynix sold 177.9 million American Depositary Shares (ADRs) for $149 each, structured so that U.S. investors can buy in at about a tenth of what a full share costs in Seoul. This deal, the largest US debut ever by a non-US company, reached the top Alibabas $25 billion IPO in 2014.

The company will begin trading on the Nasdaq today, Friday, July 10, under the temporary ticker SKHYV. Regular trading begins on Monday, July 13, when the ticker officially becomes SKHY. So far, American investors are taking advantage of it. The shares opened at 14% above the IPO priceand the price was still rising in early trading on Friday.

This even as it priced its U.S. shares at a 2.7% premium to its own three-day average at home in Seoul, according to its Filing on the Korea Stock Exchange. Still, there was demand for the supply reportedly more than seven times as much as the available shares, according to media reports.

That’s especially surprising when you consider that Korean companies have long traded at a discount to their global peers. This valuation gap is called the Korea Discount. Investors often cite factors such as complex corporate governance structures, low shareholder returns, regulatory uncertainty and geopolitical risks associated with North Korea to justify why companies from that country do not command higher share prices.

But SK Hynix is ​​clearly not suffering from the Korea Discount and that’s because it makes memory chips, including high bandwidth memory (HBM). HBM is an important part of AI GPU processors. And right now, Nvidia relies on SK Hynix as one of its key suppliers.

According to the filing, the money raised from eager US investors will go to three places: a new factory in South Korea (now being built to address the global memory shortage caused by AI); a new packaging facility in that country; and EUV scanners, the machines that make next-generation chips possible.

Meanwhile, US Secretary of Commerce Howard Lutnick dropped by a Micron event on Thursday with a message for the broader chip industry, and not just for US memory maker Micron (one of SK Hynix’s biggest competitors). Lutnick reportedly said he is already in talks with Samsung (the world’s third major memory maker) and SK Hynix about building new factories in the US. The idea is not to let South Korea remain the country that dominates this important technology.

Micron is of course in. It announced his plans to invest $250 billion in new U.S. manufacturing, a commitment the U.S. memory chip company says will create more than 90,000 jobs and keep industry-leading chip manufacturing on U.S. soil.

The timing of Lutnick’s request is notable after this US IPO for SK Hynix: both Korean chipmakers have just committed more than $550 billion for new manufacturing investments in South Korea.