San Francisco Frontiers - Chip titan SK hynix to set price for mega US listing

As governments and tech firms race to build data centres to train and run artificial intelligence, SK hynix -- a supplier to industry behemoth Nvidia -- has seen profits and its share price skyrocket.

The Asian semiconductor giant plans to issue the equivalent of nearly 18 million new shares on Wall Street's tech-heavy Nasdaq index on Friday.

SK hynix said this week it hoped to raise a whopping 43 trillion won ($28 billion) by selling American Depositary Receipts (ADRs), which allow shares of foreign companies to be traded on US exchanges.

That goal was revised down from an initial target of more than 45 trillion won, but recent volatility in the company's shares make firm estimations difficult.

Global tech stocks have tumbled in recent weeks amid fears about extended valuations -- SK hynix has jumped more than 200 percent this year -- and questions over when the enormous spending on AI will reap returns.

But the US listing has enjoyed considerable interest, with Bloomberg reporting it was more than seven times oversubscribed -- and could be among the biggest ever.

The amount raised will likely not come close to the record $75 billion raised in SpaceX's IPO last month, which made founder Elon Musk the world's first trillionaire.

But it could rival Saudi Aramco's 2019 $25.6 billion debut in the Gulf, and the $21.8 billion raised by Chinese tech firm Alibaba in its New York IPO.

Dilin Wu, research strategist at Pepperstone, told AFP the listing was "a huge development that should broaden the capital base for the memory sector".

- High bandwidth -

SK hynix is already traded on Seoul's Kospi index, where its market capitalisation soared past $1 trillion in May.

The milestone was also recently hit by domestic rival Samsung Electronics and US chipmaker Micron -- with the AI boom thrusting the three semiconductor firms into a previously exclusive club of around a dozen companies, nearly all American.

Samsung, SK hynix and Micron dominate the global market for the advanced components known as high-bandwidth memory (HBM), used in AI servers alongside other data-crunching semiconductors.

But as chipmakers plough resources into lucrative HBM, shortages of the less flashy memory chips in everyday consumer electronics are pushing up prices, with Apple hiking the cost of its MacBooks and iPads.

Counterpoint Research analyst MS Hwang said SK hynix wants to triumph over Samsung in the red-hot memory chip market.

"Along with the HBM leadership it has demonstrated until recently, the company is now planning to take the lead in terms of volume as well," Hwang told AFP.

"The use of funds from its US listing can support such a goal," Hwang said.

The AI chip boom has fuelled debate over what South Korea should do with the tax windfall, as well as workers' demands over pay packages -- with Samsung averting a strike by agreeing a deal on bonuses.

An image of an SK hynix jacket also went viral online this year as a symbol of wealth and success, with parody posts depicting it as a "golden ticket" to luxury boutiques or better dating prospects.

"SK shares the understanding that effective employee compensation and better market capitalisation are essential conditions," Counterpoint's Hwang said.

SK hynix has said proceeds from the offering will be used to fund new chip factories to ease shortages.

The company, along with Samsung, is involved in a massive public-private investment of 800 trillion won to build a new semiconductor fabrication hub in southwest South Korea.

Z.Sanchez--SFF