SK Hynix is preparing for one of the biggest overseas stock listings ever in the US, but its shares have turned highly volatile just days before the debut. The South Korean memory chip giant is expected to raise about $28 billion through a Nasdaq listing on July 10, however investors are calculating whether the recent selloff in chip stocks could affect the final pricing. Regardless of the sharp swings, institutional demand for the offering remains strong, which explains that investors still see long-term value in the AI memory leader.
Stock has fallen sharply after a massive rally
According to Bloomberg, SK Hynix shares have surged nearly 800% over the past year, due to artificial intelligence boom and soaring demand for its high-bandwidth memory (HBM) chips used in AI systems.
However, the stock has recently lost momentum. Shares have dropped around 17% this month and more than 9% from the July 3 closing price that is being used as the reference for the US share sale. On Tuesday, the stock fell more than 6% as South Korea’s benchmark Kospi index plunged enough to trigger a temporary trading halt. The recent decline has raised questions over whether the company’s historic US listing could be affected by market volatility.
Why the stock is fluctuating
Several factors are driving the recent swings in SK Hynix shares. Investors have become worried that the AI-driven memory boom may not continue at the same pace forever. Some analysts believe the semiconductor industry is moving from the early stage of the memory cycle into the middle phase, making investors more cautious.
There are also concerns that rapid expansion in chip manufacturing could eventually lead to oversupply in the coming years. At the same time, weakness in global technology stocks has added to the pressure on semiconductor shares.
In South Korea, leveraged exchange-traded funds (ETFs) linked to SK Hynix have also increased volatility. These products reset their positions daily, meaning sharp price swings can widen the gap between different ETF returns and create additional buying and selling pressure in the stock.
“The high volatility of underlying assets is cited as the reason why the difference between products is noticeable only in SK Hynix,” ETF researcher Park Seung-jin told Korean media.
Company says pricing will show market conditions
The final price of SK Hynix’s American depositary receipts (ADRs) will be determined based on the company’s share price on July 9 in New York. The company has also said prevailing market conditions will be considered before setting the final price.
Still, analysts do not expect the volatility to derail the offering. “The volatility may influence short-term investor sentiment or the timing of execution, but I would be surprised if it materially disrupted the transaction itself,” said Jung In Yun, chief executive officer at Fibonacci Asset Management Global told Bloomberg. “Unless market conditions deteriorate significantly from here, the pricing impact should be manageable.”
Strong investor demand remains
Even as the stock has weakened, demand for the offering has stayed robust. SK Hynix has received indications of interest worth as much as $7 billion from major investors including Baillie Gifford Overseas, investment funds managed by Coatue Management and Situational Awareness Partners.
According to people familiar with the deal, investor demand already exceeds the number of ADRs being offered. “The syndicate might price a bit more conservatively to ensure a strong Nasdaq debut,” said Sanghyun Park, founder of Clepsydra Capital told Bloomberg.
AI leadership continues to support the company
Many investors believe SK Hynix remains one of the biggest beneficiaries of the global AI boom. The company is a leading supplier of high-bandwidth memory chips used by customers such as Nvidia and Google’s parent company Alphabet. Its strong position in AI memory has helped it outperform rivals Samsung Electronics and Micron over the past year.
“This is more than a liquidity event,” said Dave Mazza, chief executive officer of Roundhill Investments to Bloomberg. “SK Hynix has been one of the most important companies in the world that most U.S. institutions could not easily own.”
“The listing removes an accessibility discount, not a quality discount.” Nori Chiou, investment director at White Oak Capital Partners, also believes the listing has strong appeal because US investors have limited ways to buy Korean semiconductor stocks.
“From a US investor perspective, Korean equities, particularly memory names, remain relatively scarce and difficult to access,” Chiou said. “This scarcity value should help support demand.”
What happens next
SK Hynix plans to use the proceeds from the Nasdaq listing to build new chip factories in South Korea and purchase advanced chipmaking equipment, including extreme ultraviolet (EUV) machines from ASML.
The ADRs are expected to begin trading on Nasdaq on July 10 under the ticker SKHY. If completed as planned, the offering will become the largest-ever US listing by a foreign company and one of the biggest share sales globally.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a registered financial advisor in the respective jurisdiction.