SK Hynix makes largest public listing by foreign firm in US market history—All you need to know about S Korean chipmaker

SK Hynix has made history as the biggest public listing by a foreign company in the United States stock market, as per a report by Bloomberg. The memory chipmaker based in South Korea saw its shares jump 13% on first day of trading, it added.

The report cited this success to one big factor — the artificial intelligence (AI) boom which it added has “redefined the memory chip business for good”.

All we need to know about SK Hynix

SK Hynix is controlled by South Korean conglomerate or “chaebol” SK Group. Alongside Micron Technologies and Samsung Electronics, SK Hynix's chips are used in smartphones and laptops produced by consumer tech giant Apple Inc and technology major Dell Inc.

It is the second most valuable company in the peninsula country, behind global force Samsung. Trading in the US stock markets began on 10 July, and the rally pushed its market cap near $1 trillion, according to a CNBC report.

Founded in 1983 as Hyundai Electronics, under the Hyundai conglomerate, SK Hynix merged with LG Semicon during the 1997 financial crisis. In 2001, it rebranded as Hynix Semiconductor and then became SK Hynix when SK Telecom purchased a controlling stake in 2012, the report added.

A filing with the US Securities and Exchange Commission (US SEC) as on 31 March shows that SK Square, “which was demerged from SK Telecom in 2021, held a 20.5% interest” in the chipmaker.

AI redefining chip market

The AI era has brought about supply shortage of memory chips, with demand rising across industries, the Bloomberg report added. SK Hynix's CEO Kwak Noh-Jung in his first US interview told Bloomberg said that customers are increasingly looking for long-term supply agreements and believes the shortage situation is likely to extend further than 2030.

The ongoing AI plans back Kwak's optimism. Trillions of dollars are being poured into data centres — Oracle, Microsoft, Meta, Amazon and Alphabet (Google), have added a cumulative debt near $350 billion to build hardware for their AI ambitions.

Notably, however, not all are sold. Ace investor and famed 2008 market crash predictor Michael Burry, and Bridgewater Associates founder and billionaire Ray Dalio are both bracing for the AI bubble to pop, the report added. While the tech is there and developing, proving profitability is the lynchpin.

Chipmakers see opportunity beyond market cycles

As per the Bloomberg report, SK Hynix raised $26.5 billion from its IPO, a large chunk of which is expected to be used to expand manufacturing. In the past, the industry has been plagued by cyclical supply gluts, it said. “We’ve always been a cyclical industry, so there had been prior ups and downs. But things have clearly changed,” Kwak said.

For now, SK Hynix, Samsung Electronics and Micron Technology are reaping the benefits of the AI surge. “I have some confidence that the demand will grow and our supply capacity is never going to catch up,” SK Group Chairman Chey Tae-won told Bloomberg TV.

Chey also believes that demand for chips is likely to outrun supply till artificial general intelligence is achieved aka the point at which AI systems are generally smarter than humans.

Kwak thinks, this can take decades — similar to the growth of the internet, saying: “We spent almost 30 years finishing the completion of the internet infrastructure. When it comes to AI, I believe that the AI industry size is much, much larger than the internet.”

(With inputs from Bloomberg)