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SK Hynix raises $26.5B in the biggest foreign IPO in US history, is urged tobuild new US fabs

SK Hynix raised $26.5 billion in its U.S. IPO, marking the largest-ever foreign debut on Wall Street, surpassing Alibaba's record. As demand for memory chips, crucial for AI, surges, the company plans to invest in new fabs in South Korea amid calls for U.S. chip manufacturing expansion. The stock opened 14% above its IPO price, highlighting strong interest from U.S. investors.

Key points

  • SK Hynix raised $26.5 billion in its U.S. IPO, selling 177.9 million ADRs at $149 each.
  • This is the largest IPO by a foreign company in U.S. history, exceeding Alibaba’s 2014 IPO.
  • Demand for the offering was over seven times the shares available, even with shares priced higher than average in Seoul.
  • The funds will expand production with a new fab in South Korea, a packaging facility, and EUV scanners.
  • U.S. Commerce Secretary urged Korean companies to build fabs in the U.S. to reduce reliance on South Korea.
  • Micron announced a $250 billion U.S. investment plan, promising job creation and strengthening domestic chip production.

Why it matters

  • The recent chip shortage has been driven by increased demand from the AI sector.
  • Korean companies have historically faced valuation discounts due to governance and geopolitical concerns.
  • The U.S. government is pushing for more local chip manufacturing to enhance national security and economic competitiveness.
  • This IPO aligns with trends of increasing investment in semiconductor manufacturing globally, particularly in response to AI growth.

SK Hynix's successful IPO signifies a pivotal moment in the global semiconductor landscape, emphasizing the urgent need for U.S. manufacturing amid the AI chip boom and the geopolitical ambition to reduce dependency on foreign chip production.