SK Hynix will list its American Depositary Receipt (ADR) on the U.S. Nasdaq market on the 10th (local time). The issuance size is approximately 45.5 trillion won (approximately $29.6 billion), representing about 2.5% of the total outstanding shares. Analysts suggest this move goes beyond simple fundraising, serving as a signal to the market that the AI semiconductor super-cycle is still in progress while increasing accessibility for global investors.

Professor Park Jeong-ho of Myongji University’s Graduate School of Industrial Technology appeared on the YouTube channel “The Man Who Reads the Economy (Kim Kwang-seok TV)” on the 2nd and explained, “This listing is different from a typical overseas listing. An ADR is a certificate that allows shares listed in South Korea to be traded in the U.S.” Professor Park assessed, “Since investors can easily purchase SK Hynix on the Nasdaq, which is the market most watched by global investors, it could be a positive factor for the stock’s revaluation.”

However, he added, “There is a possibility that this will include some new share issuance effects, which is a concern. It would be more desirable for investors to come to the South Korean market to invest in our representative companies.”

A Signal of Expanding AI Investment

Professor Park found the greatest significance of this ADR listing in the continuous expansion of investment in the AI industry. He interpreted the move as “a signal showing the need to expand semiconductor supply,” judging that “capital is flowing in to the extent that more facility investments are necessary.”

This also serves as a basis to counter the theory of an AI semiconductor super-cycle ending, which has recently been raised in some corners of the market. Professor Park emphasized, “Many people ask, ‘Isn’t this an AI bubble? Isn’t the semiconductor super-cycle ending?’ SK Hynix has essentially responded by saying, ‘That doesn’t seem to be the case.’ The very fact that they need to increase facility investment means they see AI infrastructure demand continuing to expand.”

He also noted that the AI industry is moving beyond data centers into the era of “Physical AI.” Professor Park predicted, “Until now, data center-centric hardware was important for using AI on the web and apps based on LLMs (Large Language Models). Going forward, as Physical AI—using AI in physical spaces—takes off, an era where robots support humans will arrive.” He explained, “Various devices supporting AI in the real world will be created, and South Korean semiconductor companies are inevitably positioned to provide the most critical physical foundation for the AI industry.”

Expectations Amid a Plunging South Korean Stock Market

This ADR listing is drawing even more attention as it coincides with a sharp drop in SK Hynix’s stock price. On the 2nd, SK Hynix closed at 218,700 won (approximately $142.61), down 14.57% from the previous day. Samsung Electronics also finished the session down 9.06% at 28,600 won (approximately $18.58). This was attributed to the previous night’s sell-off in AI-related semiconductor stocks on the New York Stock Exchange, triggered by controversy over excessive investment by Big Tech.

Amid this backdrop, stock market experts expect the U.S. listing of the ADR to have a positive impact on SK Hynix’s stock price. While the ADR itself does not guarantee a theoretical increase in corporate value, analysts believe it enhances trading accessibility for investors.

Lee Jong-wook, an analyst at Samsung Securities, diagnosed, “The ADR can be exchanged with the underlying South Korean shares at a conversion ratio of 0.1, within a limit of 17.79 million shares. If the ADR trades at a premium to the converted price of the underlying shares in the U.S., arbitrage traders can deposit the underlying shares with the depositary bank and receive ADRs to sell. This arbitrage channel could have the effect of the ADR price pulling up the KOSPI underlying share price.”

Park Jun-young, an analyst at Hanwha Investment & Securities, also predicted, “The ADR listing provides an opportunity for SK Hynix to be evaluated within the same market as industry peers like Micron, SanDisk, and Seagate, which are listed in the U.S. stock market. Considering its overwhelming valuation attractiveness (stock price relative to earnings), the scale of its profits, and its technological superiority, SK Hynix could be revalued.”

SK Hynix has higher operating profits than its competitor Micron Technology (MU), but while Micron’s 12-month forward price-to-earnings ratio (PER) is around 11 times, SK Hynix remains at around 6 times. Market attention is focused on the possibility that this discount factor will be resolved.

Expected Benefits for SK Square

The ADR listing of SK Hynix is also expected to be a boon for its largest shareholder, SK Square. SK Square holds a 20.5% stake in SK Hynix, and fluctuations in SK Hynix’s corporate value directly impact SK Square’s net asset value (NAV) and stock price.

Securities analysts expect the ADR listing to partially resolve the discount factor on SK Hynix’s corporate value by increasing accessibility for foreign investors and expanding the inflow of global passive funds. If new shares are issued following the ADR, SK Square’s stake will be slightly diluted but is expected to remain around the 20% level. SK Hynix also explained in its registration statement filed with the U.S. Securities and Exchange Commission (SEC) that the offering size was determined considering the requirement under South Korea’s Fair Trade Act for the largest shareholder, SK Square, to maintain a stake of 20% or more.

Kim Hoe-jae, a researcher at Daishin Securities, projected, “If SK Hynix uses a certain amount of its cash flow for share buybacks and cancellations, SK Square’s stock price is expected to rise in tandem with SK Hynix’s share price increase.”

Use of Proceeds and Future Outlook

SK Hynix plans to invest the funds secured through this ADR listing into the Yongin Semiconductor Cluster, the Cheongju advanced packaging plant, advanced semiconductor production equipment, and the expansion of AI semiconductor production facilities. Ryu Young-ho, an analyst at NH Investment & Securities, judged that “the improvement in cash flow from the fundraising is also highly likely to be used as a resource for future shareholder returns.”

SK Hynix’s final offering price will be determined on the 10th, with trading commencing on the Nasdaq. The process concludes with the additional listing of new shares on the KOSPI on July 29. If included in major indices like the Nasdaq 100 or the Philadelphia Semiconductor Index in the future, there is a possibility of additional inflows from related ETF funds. In fact, TSMC also significantly increased U.S. investor accessibility through its ADR listing and has established itself as a representative semiconductor stock attracting global capital amid the AI investment boom.

However, existing shareholders should consider that since this listing is a rights offering method that issues new shares, the increase in the number of shares could partially dilute the value of their holdings. While rights offerings are typically perceived as a burden on the stock price, the assessment this time is that expectations are higher that the funds raised will be invested in AI semiconductors and that corporate value can be recognized again. As some analysts suggest that listing expectations are already somewhat reflected in the stock price, the extent to which the U.S. market actually recognizes the company’s corporate value will be a key point to watch in determining future stock price movements.

Meanwhile, Professor Park Jeong-ho diagnosed that the AI industry is not completed by semiconductors alone, explaining that AI, energy, robotics, space, and blockchain are interlocked like gears. He said, “As AI develops, power demand surges, and data center and network construction expands, connecting to the energy and space industries.” Furthermore, he predicted that an era of financial hegemony competition may also unfold alongside the AI era, forecasting, “The U.S. will likely try to unconditionally receive AI usage fees only in stablecoins going forward.”