Original | Odaily Planet Daily (@OdailyChina)
Author | Azuma (@azuma_eth)
Bloomberg reported this morning, citing informed sources, that the subscription multiple for the "American Depositary Receipts" (ADRs) issued in the U.S. by South Korean semiconductor giant SK Hynix has exceeded seven times, making it likely to become the largest foreign listing in U.S. history.
Previously, at the end of June, SK Hynix submitted an F-1 prospectus to the U.S. SEC, planning to list on the NASDAQ by issuing 177.9 million ADRs (each ADR representing one-tenth of an ordinary share). Based on the closing price in the South Korean market on Wednesday of 2,076,000 won (approximately $1,380), the total fundraising is expected to reach about $24.5 billion. The funds raised will be entirely used for expanding domestic production capacity in South Korea, including the Yongin wafer fab, the Cheongju advanced packaging production line, and investments in EUV and related equipment.
As SK Heads to the U.S., the Semiconductor Sector is in a Deep Squat
While SK Hynix is going public in the U.S., the entire semiconductor sector is experiencing a sharp correction.
Over the past two years, AI infrastructure investment has been the core driver of the semiconductor sector's rise. Benefiting from the sustained expansion of capital expenditures by tech giants like Microsoft, Google, Meta, and Amazon, segments of the industry chain such as GPUs, HBM memory, and advanced process equipment have seen explosive performance, driving stock prices ever higher.
Recently, however, the market has begun to re-examine the sustainability of this narrative. First, Meta was reportedly planning to sell some of its idle computing resources, interpreted by the market as a signal that tech giants have begun to signal an optimization of AI infrastructure spending. Subsequently, Blackstone's plan to build what would have been the world's largest data center project was canceled, further reinforcing market concerns about a slowdown in data center demand growth.
While these events are not entirely equivalent to the "AI investment cycle" ending, they have triggered a market repricing of a key question — after hundreds of billions of dollars in capital investment, can the AI capital expenditures of tech giants maintain their current growth rate?
As a result, the AI industry chain has been under pressure recently. From chips and memory to semiconductor equipment, the market's trading logic has shifted from "unlimited demand growth" to "whether future growth can still materialize." SK Hynix's stock price has also seen a significant correction, falling from a high of 2,917,000 won on June 25th to yesterday's closing price of 2,076,000 won, a maximum drawdown of nearly 30%.
Secondary Market Under Pressure, Primary Market Goes Wild
Interestingly, while the secondary market continues to adjust, SK Hynix's U.S. listing has received far more enthusiastic capital support than expected.
As mentioned earlier, the subscription multiple for this ADR issuance has exceeded seven times, indicating strong institutional interest. According to information disclosed in SK Hynix's roadshow materials, the demand for this subscription mainly comes from various institutions including global long-term funds, technology theme funds, sovereign wealth funds, and Asian theme investors. Among them, institutions such as Baillie Gifford, Coatue Management, and Situational Awareness Partners have expressed subscription intentions totaling approximately $7 billion.
Note the mention of Situational Awareness here; this is the fund controlled by the newly crowned "AI Stock God" Leopold Aschenbrenner, arguably the most explosively performing fund in this AI cycle. For details, see "From SBF's Protege to Turning $225M into $5.5B in a Year," and "A Look at the Latest Moves of the 24-Year-Old 'AI Stock God': 60% Position Hedging Against Semiconductor Downturn."
The frenzy from institutions suggests that, at least from the perspective of long-term capital, the market has not entirely dismissed the AI infrastructure investment cycle. In fact, the recent correction in the semiconductor sector is fundamentally more of an adjustment in valuations and expectations rather than a reversal in industry fundamentals. Investors are concerned about whether the future growth rate of capital expenditures will slow, not whether current core products like HBM and AI chips are losing demand.
Additionally, it's worth noting that a speculation has been circulating in the market regarding the timing of SK Hynix's listing: perhaps the significant stock price adjustment before listing on the NASDAQ is to make the post-listing performance look better, creating a win-win situation for the company, underwriters, institutions, and retail investors...
This logic may not be fully verifiable, but from a trading perspective, it could indeed reinforce market optimism about the post-IPO price trajectory — for the issuer, a lower valuation starting point is favorable for subsequent price performance; for subscribing institutions, it also implies greater potential upside.
Therefore, SK Hynix's U.S. listing this time could very well become an important inflection point for semiconductor market sentiment in the short term.
The True Reversal Signal Depends on the Tech Giants' Next Report Card
However, the mere heat of SK Hynix's U.S. IPO doesn't seem to fully answer whether the semiconductor sector's correction has ended.
Looking at the industry cycle, the core of the current market debate is not whether AI demand still exists, but whether tech giants can continue to maintain capital investments at their current scale. Over the past two years, companies like Microsoft, Google, Meta, and Amazon have continuously ramped up AI infrastructure construction, pushing global data center investment into a phase of rapid expansion. According to plans previously announced by these tech giants, AI-related capital expenditures are set to remain high in the coming years.
But simultaneously, as the scale of investment continues to expand, investors are increasingly focusing on "when these massive capital investments will translate into tangible commercial returns."
If AI application growth can keep pace with infrastructure investment, then the current adjustment in the semiconductor sector would resemble a digestion of high valuations after a rally. But if tech giants start slowing down data center construction and reduce GPU procurement, then the high-growth expectations previously priced into the AI industry chain would face significant revision. Therefore, the earnings reports from tech giants in the next few quarters will become the key to determining the direction of the semiconductor market.
In other words, while SK Hynix's listing might serve as a catalyst for short-term sentiment in the semiconductor sector, what truly determines whether the AI cycle can continue remains the clear answer from tech giants like Microsoft, Google, Meta, and Amazon regarding their future capital expenditures.
