All totaled, SK Hynix is hoping to raise $28 billion via the share sale, the largest such foreign listing in history, as it seeks to build up its manufacturing capacity to keep up with the incredible need for memory and storage chips driven by the global AI build-out. <\/p>\n
The debut also gives US investors an easier way to get in on the South Korean memory stock bonanza. <\/p>\n
The company’s Korea-listed stock, which trades on the Korea Exchange, has skyrocketed 174% over the past 6 months and 636% in the past year.\u00a0 <\/p>\n
Though, as Yahoo Finance’s Jared Blikre points out,<\/a> memory stocks fell into a bear market on Tuesday. <\/p>\n Memory makers are flying high thanks to the seemingly insatiable demand for high-bandwidth memory (HBM) and storage chips, which has created a global shortage that is impacting everything from data center builders to the consumer electronics industry. <\/p>\n Data center servers require storage chips to save and access data needed to run AI models and processes. But AI chips, like Nvidia’s (NVDA<\/a>) graphics processing units (GPUs), don’t need to access every bit of program or AI model all the time. Doing so would make them slow and inefficient. <\/p>\n It’d be like trying to remember everything that’s happened in your life when someone asks what you did over the weekend. <\/p>\n That’s where HBM comes in. This specialized memory holds the most important data needed to run a piece of software, right next to the processor, enabling super-fast performance. <\/p>\n There are three major companies that make HBM and storage: Micron (MU<\/a>), Samsung (005930.KS<\/a>), and SK Hynix. And according to SK Hynix’s filing with the Securities & Exchange Commission, it’s the latest producer of HBM, capturing 56.4% of the market. All three companies are Nvidia partners. <\/p>\n But American investors have limited means to purchase shares of SK Hynix or Samsung via US markets.\u00a0 <\/p>\n As it stands, that dearth of memory and storage chips could last into 2030. That’s because standing up new manufacturing facilities takes years. <\/p>\n But the memory industry is also prone to periods of booms and busts. <\/p>\n “Let’s not forget a few years back these memory makers were negative gross margins, not negative\u2026net income, but negative gross margins,” explained Patrick Moorhead, founder and CEO of Moor Insights & Strategy.\u00a0 <\/p>\n “They were literally selling stuff below costs, and then they rapidly pulled back on capex and \u2026 here we are.” <\/p>\n During its recent earnings call, Micron announced that it is signing customers to long-term strategic customer agreements (SCAs), in which clients commit to purchasing a specified quantity of Micron’s chips each year over the course of the contract, while paying a large upfront cash payment. <\/p>\n Micron chief business officer Sumit Sadana told Yahoo Finance at the time that most of those agreements run for five years, whereas prior memory agreements lasted just one year. <\/p>\n But there’s no telling whether such deals will hold off a new boom and bust cycle when the memory crunch finally eases. <\/p>\n Email Daniel Howley at dhowley@yahoofinance.com. Follow him on X at @DanielHowley<\/a>. <\/p>\n Click here for the latest technology news that will impact the stock market<\/a>. <\/p>\n Read the latest financial and business news from Yahoo Finance<\/a> <\/p>\n <\/a> The logo of SK Hynix is seen on its product during The 26th Semiconductor Exhibition (SEDEX 2024) in Seoul, South Korea, October 23, 2024. REUTERS\/Kim Hong-Ji \u00b7 Reuters \/ REUTERS <\/p>\n
<\/a> Sign up for Yahoo Finance’s Week in Tech newsletter. \u00b7 Yahoo Finance <\/p>\n