Original | Odaily Planet Daily(@OdailyChina)
Author|Azuma(@azuma_eth)
SK Hynix's process for listing in the U.S. has entered its final stage. However, just as this South Korean memory giant is about to debut on the Nasdaq, the narrative surrounding the AI and semiconductor industries has taken a sharp emotional turn in a remarkably short period.
On the evening of July 1, news that "Meta might release excess computing power" sparked speculation that major tech companies could cut back on capital expenditures, leading to significant market volatility. As the narrative of AI computing power's "absolute scarcity" began to loosen, the semiconductor memory chip sector was directly impacted, causing a substantial collective correction in related stocks in the secondary market — SK Hynix's South Korean stock closed down 14.57%, wiping out over a hundred billion dollars in market value in a single day.
- Odaily Note: For reference, see "Has the 'Biggest Headwind' for Chip Stocks Finally Arrived? Could Meta Be the First Major Company to Cut Capital Expenditure?".
Countdown to SK Hynix's U.S. Listing
On June 30, SK Hynix submitted its F-1 registration statement to the U.S. Securities and Exchange Commission (SEC), planning to list on the Nasdaq via the issuance of "American Depositary Receipts" (ADRs). The planned fundraising scale is approximately 45.45 trillion Korean won (about $29.4 billion USD), potentially becoming one of the largest ADR issuances in history. The proceeds from this offering will be entirely used for expanding domestic production capacity in South Korea, including the Yongin wafer fab, the Cheongju advanced packaging line, and investments in EUV and related equipment.
- Odaily Note: An ADR (American Depositary Receipt) is essentially a trading vehicle for non-U.S. companies in the U.S. stock market. An ADR is not a stock directly issued by the company on the U.S. exchange; instead, it is a "substitute security" issued by a custodian bank in the U.S., with the underlying asset being the ordinary shares of the foreign company. Through ADRs, investors can directly trade the shares of overseas companies in the U.S. market in U.S. dollars without the need to open cross-border accounts or handle foreign exchange and settlement processes.
This transaction is jointly underwritten by Bank of America, Citi, Goldman Sachs, and JPMorgan. A total of 17.79 million new shares will be issued (representing 2.5% of its total issued shares), with the stock ticker SKHY. In terms of timing, the ADRs are expected to begin trading on the Nasdaq on July 10.
The fundamental reasons why SK Hynix is actively pursuing its U.S. listing at this point in the cycle are the convergence of three factors: the industry cycle, the capital window, and competitive dynamics.
First, SK Hynix is currently experiencing a historically strong business cycle. Driven by AI server demand, High Bandwidth Memory (HBM) has become the most critical supply bottleneck. The company holds over a 50% market share in this segment, which has simultaneously propelled its overall DRAM business into a high-profit phase. This has also led its performance and stock price into an upward trajectory, creating a typical "financing window at the peak of the cycle" — raising funds for large-scale capacity expansion during the period of strongest fundamentals.
Second, from a capital market structure perspective, the U.S. market remains the primary pricing center for global AI assets. Whether it's NVIDIA, AMD, or memory chip companies like Micron, the U.S. stock market generally assigns significantly higher valuation multiples and liquidity premiums to AI industry chains. In contrast, the South Korean market has long suffered from the so-called "Korea discount," with similar semiconductor assets generally valued lower than their U.S. counterparts. Therefore, one of the core purposes of SK Hynix's U.S. ADR listing is to seek a re-rating within a higher valuation framework.
Lastly, memory giants are currently engaged in fierce competition for capacity expansion, which heavily relies on continuous massive capital investment. SK Hynix's nearly $30 billion USD fundraising will be entirely used for wafer fab expansion, advanced packaging, and equipment capacity increases, essentially aiming to translate capital advantage into capacity advantage.
Falling So Sharply, Is SK Hynix Still Worth Buying?
Initially, SK Hynix's U.S. listing could have been viewed as a historic moment for the memory industry. However, the significant correction that began last night has injected immense uncertainty into its near-term outlook. Is this an opportunity to buy the dip, waiting for a takeoff post-U.S. listing? Or should one decisively reduce positions to avoid a potential bubble burst?
Disclaimer upfront: The following section is purely based on personal opinion and does not constitute investment advice.
In my personal view, this sharp decline of SK Hynix, including the substantial sector-wide correction, resembles a liquidity-driven stampede amplified by sentiment, rather than a fundamental reversal of industry trends.
First, focusing on the news catalyst — "Meta might release excess computing power" — this report itself appears to be overinterpreted.
Bloomberg's original headline when first publishing this news was "Meta Is Building a Cloud Business to Sell Excess AI Compute," but it was later changed to "Meta Is Planning a Cloud Business Sell AI Computing Power." However, other media outlets, including Reuters, had already forwarded and reported using the first headline.
There are two key changes between the two headlines. Firstly, "is building" was changed to "is planning to build," which directly reduces the certainty and timeliness of the report. Secondly, the term "excess" was removed. However, this initial term easily led the market to interpret it as "computing power is already in excess," triggering a chain of reasoning: "excess computing power → capital expenditure peaking → weakening AI demand," ultimately causing market panic.
Taking a step back, even if it's confirmed that Meta intends to sell computing power, it's difficult to constitute sufficient grounds to conclude that the "AI capital expenditure cycle" has ended. From an industrial logic perspective, Meta itself is relatively behind in the AI race. The pressure it faces in foundational models and computing efficiency objectively determines that Meta has some degree of need for computing power scheduling and asset optimization. Against this backdrop, externalizing or commercializing part of its computing resources resembles an act of optimizing asset utilization rather than a systematic contraction on the demand side.
Such "computing power reallocation" is not uncommon in the AI industry chain. Two months ago, SpaceX also commercialized part of its computing resources (e.g., leasing to Anthropic). Essentially, this is a rebalancing act for cost and resource efficiency, not a negation of AI demand itself. Therefore, extrapolating the computing scheduling behavior of a single company, of an uncertain scale, directly to imply "industry-wide excess" represents a clear logical leap.
As for why the impact of this news was so severe, another crucial reason lies in the market structure. Prior to this round of decline, the semiconductor memory chip sector was already at relatively high levels, with concentrated holdings from trend-following funds and leveraged ETFs. Under such a structure, market sensitivity to marginal information significantly increases. Once a narrative shock occurs, it easily triggers amplified deleveraging and passive selling, transforming what might have been a "level of expectation adjustment" volatility into a "price stampede-level" correction.
Therefore, this correction more closely resembles a typical outcome of "sentiment panic + structural deleveraging" superimposed. Personally, I am also inclined to take the opportunity to add positions during this decline.
After all, SK Hynix itself is in the critical window for its U.S. listing. With a fundraising size nearing $30 billion USD, whether it's the underwriters or the institutional funds participating in the subscription, they likely wouldn't want the stock price to perform too poorly after the listing.
