SK Hynix to Debut ADRs on Nasdaq, Raise Up to $26.8 Billion

SK Hynix Inc. will list American depositary receipts on the Nasdaq on Friday, a move that could raise as much as $26.8 billion to speed up expansion of its semiconductor production capacity.

Industry officials said on July 10 that SK Hynix ADRs will begin trading on the Nasdaq later that day. For the offering, the company will issue up to 17.79 million new shares, equal to about 2.5% of its outstanding stock. The deal is expected to raise about $26.8 billion, with settlement scheduled for July 14.

The proceeds will be used to expand production capacity and invest in advanced packaging. In a regulatory filing, SK Hynix said the funds would go toward construction and facilities for the first fab at its Yongin semiconductor cluster, the Cheongju P&T7 advanced packaging fab, and related machinery and equipment. The company also plans to invest in extreme ultraviolet lithography tools, with spending of 11.9 trillion won, or about $8.6 billion, planned for EUV equipment due to be introduced by the end of next year.

The global memory-chip market is projected to keep growing despite concerns that the cycle may be nearing a peak. Counterpoint Research said the average operating margin of the world’s three largest memory makers could reach 75% to 80% in the second quarter of this year. The research firm also said the supply-driven boom could last at least through 2027.

Competitors are also expanding capacity. Micron Technology has recently begun building a next-generation high-bandwidth memory production line in Hiroshima, Japan, with an investment of 14 trillion won, or about $10.1 billion. In South Korea, efforts to expand chip manufacturing bases are continuing, including plans for a semiconductor cluster in the Honam region.

The Nasdaq listing could also serve as a catalyst for a re-rating, beyond simply raising capital. SK Hynix holds the top position in the global high-bandwidth memory market and has maintained a gap over Micron in the global DRAM market.

Even so, its price-to-earnings ratio is valued at 20% to 40% below Micron’s. SK Hynix expects the Nasdaq listing to improve access for global investors and help narrow that discount.

SK Group Chairman Chey Tae-won said earlier this year that an ADR listing would help the company become more global by increasing its exposure not only to Korean shareholders but also to US and international investors.

Market participants have also raised the possibility that the Nasdaq listing could draw inflows from global asset managers, pension funds and passive investors. SK Hynix believes the benefits of broader global investor access and capital inflows will outweigh any shareholder dilution, given that the new share issuance amounts to about 2.5% of total shares outstanding. The company said it plans to continue communicating with the market and prepare a more detailed shareholder return plan within the year.

Lee Song-ryeol, Hankyung.com reporter yisr0203@hankyung.com