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This article is also available in English. It was translated with technical assistance and reviewed by the editors before publication.
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The ringing of the bell signaled the start of the hunt, which lasted only one day. SK Hynix, a South Korean chip maker with a strong following in the artificial intelligence space after a battle over the distribution of DRAM, especially HBM, debuted on the U.S. Stock Exchange in New York on Friday. SK Hynix CEO Kwak No-jeong predicted to the press that the storage crisis had not yet reached its peak. But this did not lead to significant growth in business with SK Hynix shares; As a result, the stock closed with a slight price loss.
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Some people may have had high hopes for the company, which has so far only been listed on the South Korean stock exchange, to IPO in the United States. At the end of June, SK Hynix dethroned Samsung as the most valuable company listed on the stock exchange. The chipmaker has now achieved a market capitalization equivalent to almost 1.19 trillion euros, slightly higher than rival Samsung Electronics, which has topped rankings of the country’s most valuable companies since the turn of the millennium. Background: Massive competition from artificial intelligence manufacturers for limited supply in the DRAM and flash memory components market. After an all-time high in market capitalization, things started to go downhill again.
Mega IPO – the share price is not so mega
On Friday, the American Stock Exchange experienced what it considered a mega-IPO for the South Koreans: they raised $26.5 billion with their American Depositary Receipts (ADRs), which were worth $168.01 each, which corresponded to a starting price of $170. This made it the largest IPO ever by a foreign company in the United States. On the US stock exchange you can only buy ADRs for foreign shares – 10 ADRs correspond to one ordinary share of SK Hynix. The share price rose 13 percent during the day but closed with a slight loss of 0.8 percent. The market capitalization was $941.8 billion after the market closed on Friday. If you look at the last twelve months, SK Hynix shares are still in overall growth. However, SK Hynix had no prospects of reaching absolute price peaks in June after the stock market closed on Friday.
By going public on the U.S. stock exchange, the chipmaker’s primary goal is to create another source of badly needed capital needed to build more chip factories. SK Hynix occupies a very explosive manufacturing position in the race for the best artificial intelligence: the company is a leader in the development of HBM for artificial intelligence accelerators and supplies, among others, the world market leader Nvidia. But even with the extra money from the share sale, SK Hynix will not be able to meet the huge demand, said CEO Kwak No-jeong. The global market has been in a chip crisis for a long time and has not yet reached its peak, he gave a gloomy forecast to Reuters at the IPO on Friday. “We expect next year to be the worst year in the history of the industry in terms of supply,” he said. According to him, consumer demand continues to grow, and production capacity is limited. “We continue to expect consumer demand to exceed our supply capacity beyond 2030. But we are doing everything we can to solve this problem,” he said.
He also spoke about possible new production locations. The US, Japan and Southeast Asia are being considered, but are reluctant to make a decision yet. SK Hynix strives to combine space, electricity, water and skilled personnel with competitive production costs. SK Hynix is already investing heavily in its home country, with plans announced last month by Samsung Chairman Lee Jae-yong and Chey Tae-won, a former executive and major shareholder of SK Group, along with South Korean President Lee Jae-myung. Goal: South Korea’s DRAM production should double by 2031. SK Hynix and Samsung are investing 800 trillion won in building new factories, which currently amounts to about 455 billion euros. US manufacturer Micron is also expanding its existing capacity.
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Not everyone believes in the data storage boom
However, there are doubts that the boom in demand for some AI chips will actually continue. The reason, for example, is Apple’s attempts to purchase memory from the Chinese manufacturer ChangXin Memory Technologies (CXMT). Now competitive DDR5 components can be produced here. Additional suppliers with lower prices could also make things easier for Apple. Can other companies follow suit? This thought may also have led to SK Hynix’s share price closing on the US stock exchange without any profit on Friday.
On Friday, Chey Tae-won preferred to look at the medium-term future: “The main thing is to increase sales and thus further increase the share price,” he told Bloomberg news channel in New York. Then SK Hynix may be able to issue more ADRs to the US capital market in the future.
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