Chip Heavyweight Hynix Projected for $28 Billion Record IPO
Shares in the Korean semiconductor firm are set to list on Friday and raise a record amount for a company based outside of the U.S.
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Friday is the scheduled start of trading for the official U.S.-listed shares of Korean chipmaking heavyweight SK Hynix (HXSCL) (KR:000660).
The offer has been heavily oversubscribed, as you might expect for a company that is one of the three main players in the memory-production sector that has been the hottest segment of the market so far this year.
No Real Negatives
I see no real negatives and takeaway only positives from Hynix listing shares on Nasdaq, an offer that should raise around $28 billion. Hynix is offering the equivalent of 17.79 million shares, or 2.44% of all shares outstanding after the offer.
These American Depository Shares (synonymous with American Depository Receipts or ADRs) will trade with 10 ADRs equivalent to 1 Hynix share, so there are 177.9 million ADRs set to start trade on Nasdaq. The U.S. shares are due to price on Thursday night and list on Friday, July 10, initially under the ticker SKHYV, then switching to SKHY as normal trading gets under way on July 13.
At $28 billion, the Hynix stock listing would surpass the 2014 initial public offering by Alibaba Group Holding (BABA) (HK:9988) as the largest U.S. stock sale by an overseas-based company. The Alibaba IPO raised $25 billion. Fluctuations in the Hynix price could see the offer fall short of that mark, but Hynix closed Seoul trade on Thursday up 5.3% at 2,186,000 won, equivalent to $1447.
That arrests a recent slide, and implies an offer size of $25.7 billion. You can find the updated Hynix listing details and background on the company through the July 6 filing here.
Sudden Plunge for Chip Stocks
The listing comes at a tumultuous time, with the bull run in semiconductor stocks looking decidedly toppy, creating very choppy trade. Any hint of a sales or profit slowdown is punished severely after a record first six months of the year.
Hynix shares, up 358.8% from the start of the year through its all-time high on June 25, have since sunk 26.8% in Seoul trade.
The South Korean benchmark, the Kospi, has followed a similar trajectory, up 122.7% from the start of the year through its June 19 intraday high to make it the world’s top-performing index in 2026. It is down 22.3% since then.
I analyzed in my last column what it means to see rival Samsung Electronics (KR:005930) sell off, despite updating guidance to say it expects to deliver bumper profits at the end of this month, up 19-fold. You can find my take on that here.
Iran Tension, Higher Oil, Lower Stocks
The renewed hostilities in the Persian Gulf have also pushed a flight from risk, investors taking chips off the table in the most-profitable play: memory chipmakers.
So we saw the Philadelphia Semiconductor Index fall 4.7% on Wednesday, falling below its 50-day moving average for the first time since April. Oil prices rose given potential disruption of supplies to Asia in particular, with Brent crude just north of $80 per barrel. It was just above $70 at the start of this month.
While there are signs that investors sell first and ask questions later on semiconductor stocks, there are no signs yet that customer demand for memory chips is waning.
High chip prices provoked by hyperscalers snapping up supply are spilling throughout the production chain, causing even video game console makers such as Microsoft (MSFT) and Sony (SONY) to raise prices for the Xbox Series X and Sony PlayStation 5 well into the life cycle of current consoles, at a time they normally go on sale.
Highly Sought-After Shares
The Hynix listing is reportedly more than seven times oversubscribed. Three cornerstone investors – British long-only investor Baillie Gifford, New York-based tech investment manager Coatue Management and San Francisco-based hedge fund Situational Awareness Partners – have taken up $7 billion of the stock, Hynix using the Asia-style approach of securing early commitments from institutional investors to support the offer.
Not that it likely needs any support! The offer is sure to attract plenty of retail interest not to mention the attention of tech institutional investors, global long-only funds, sovereign wealth funds, pension funds, you name it.
Personally, as a retail investor, I have had little luck getting any kind of allocation whatsoever when applying through my broker. Orders closed on Wednesday.
U.S. Investors Already Able to Access Hynix
But U.S. investors are already able to access Hynix shares via the highly successful Roundhill Memory ETF (DRAM). Since its launch on April 2, the exchange-traded fund (ETF) has rapidly raised assets under management to $23 billion, and become one of the most-actively traded names on Wall Street.
Three stocks — Samsung, Hynix and Micron Technology (MU) — make up 75.1% of the exposure at last count. That includes a 232.5% allocation to Hynix, an investment roster rounded out with stakes in Sandisk (SNDK), Seagate Technology Holdings (STX), Western Digital (WDC), Tokyo-listed Kioxia Holdings (KXIAY) (T:285A), the China-based, Hong Kong-listed chip designer GigaDevice Semiconductor (GIGDY) (HK:3986) and the two Taiwan-trading names Nanya Technology (NNYAF) (TW:2408) and Winbond Electronics (WBEKY) (TW:2344).
The thing that makes DRAM particularly interesting is that Hynix, Samsung and the other Asia-based chipmakers have not been easy tickers for U.S. investors to access.
Shift From Unsponsored to Sponsored ADRs
Hynix has had unsponsored ADRs trading over-the-counter under the ticker HXSCL. But they’ve had no connection to Hynix itself, and volume has been light. We’ll have much better price discovery and efficient trading with an official Nasdaq listing.
I just got an updated list of the most-active tickers trading on the Interactive Brokers brokerage platform. It features a host of similar names and other chip-focused or artificial intelligence plays.
Here’s the top 10, based on a five-day average, repeating tickers if I’ve mentioned them before for simplicity’s sake:
Micron Technology (MU)
Direxion Daily Semiconductor Bull 3x ETF (SOXL)
Sandisk (SNDK)
SpaceX (SPCX)
Tesla (TSLA)
Nvidia (NVDA)
Roundhill Memory ETF (DRAM)
Intel (INTC)
Advanced Micro Devices (AMD)
Nebius (NBIS)
It is remarkable how concentrated that trading is. Outside the Elon Musk Industrial Complex, and the data-center operator Nebius, the rest of the names basically design or produce chips.
Net buying remains consistent, the brokerage platform said, with customers continuing to buy on dips in the likes of MU, SNDK and DRAM. Semiconductor stocks account for about 30% of the net buying.
“Our customers continue to love leverage,” Steve Sosnick, the chief strategist for Interactive Brokers, said. “The general feeling that I’m getting is that for many traders, it’s not a tradeoff between risk and reward — for many, the more risk, the more reward.”
Scary Shakeout Ahead?
We could see a scary shakeout given the amount of leverage that investors are taking on. Investors must expect intense volatility in Hynix shares, although trading should be stabilized by having stock changing hands on Wall Street rather than the highly condensed Korean market.
Margin debt has risen to a record $25 billion in South Korea, much of it pumped into 16 newly listed single-stock leveraged ETFs trading in Seoul. The ETFs started trading on May 27, providing leveraged 2x exposure to Samsung Electronics and Hynix, 14 of them on the long side and two on the short side. Those single-stock ETFs now account for as much as half of the daily trading in Hynix and Samsung.
Oh, and yes, ProShares is launching a 2x leveraged ETF to invest into Hynix for U.S. investors. The ProShares Ultra SK Hynix ETF (SKHU) is due to start trading on Monday, and will of course magnify downside moves like we’ve been seeing recently as well as juicing the up days.
Safer to Stick to DRAM
I will for now stick to DRAM to offer some slim diversification away from company-specific risk. Hynix is riding high for now but noted that the memory makers are placing billion-dollar bets on production facilities due to come online in the years ahead. It also has a high degree of customer concentration, should hyperscaler spending on artificial intelligence facilities slow down.
Samsung and Hynix last week committed to invest 800 trillion won ($528 billion), with as much as 111 trillion won ($73 billion) in government backing, to build chipmaking plants in under-developed parts of South Korea, in particular the southwest.
DRAM shares have found recent support around the $60 level, well up for their original list price of $28. The ETF can constitute a core long-term holding, but will offer trading opportunities given the exceptional volatility of the Korean market and semiconductor stocks at the moment. They briefly rose above $80 on June 22.
Of greater concern to me than the difficulties of expanding production, securing energy and sourcing raw materials is the amount of leverage that investors are taking on to invest into chip stocks. There’s also issues surrounding chip prices, which have traditionally fallen rather than their current rapid rise in cost.
For Q1, Hynix posted a $26.5 billion profit off $34.5 billion in sales — a whopping net profit margin of 76.7%. Samsung’s selloff stemmed from its modest increase to its sales forecasts, which only just outdid the bullish analyst forecasts. But it is unlikely that, while earnings are setting records, the profit margins can continue to rise.
Investors will surely sell down any indication of waning profits, too. Until we see those signs of weakness, though, Hynix shares should continue to ride high on Wall Street.
At the time of publication, McMillan was long DRAM and MSFT.
