NAND & DRAM fabber SK Hynix wants US stock listing for chip fab cash

SK Hynix is looking to a US stock market listing to raise up to $14 billion in cash.

The HBM, DRAM, NAND and SSD supplier will, according to numerous sources such as Reuters and South Korea’s Chosun, issue new shares in South Korea. These will be used by a US bank to backup American Depositary Receipts (ADRs) which are tradable on US stock markets. SK Hynix has filed an F-1 form with the US SEC (Securities and Exchange Commission) to list ADRs on the U.S. market. The intent is to raise between ₩10 - 165 trillion ($9.6 - 14.4 billion) to help pay for chip fabrication equipment.

There is a world-wide shortage of both HBM and DRAM due to the huge demand for GPU servers and x86 servers. Memory makers including SK Hynix, Samsung and Micron are pulling forward plans to build new fabs to increase chip production capacity.

Existing SK Hynix shareholders in South Korea are complaining that this will dilute their shares and SK Hynix has enough cash in its reserves to fund the buildout.

At its 78th AGM, SK Hynix CEO Kwak Noh-Jung said the company has implemented a shareholder return program totaling ₩114.3 trillion through additional dividends and the cancellation of treasury shares, and "SK hynix plans to continue reviewing dividends and share repurchases this year with the aim of further expanding shareholder returns."

SK Hynix "will work to secure 100 trillion won in net cash over the long term to enhance our financial soundness, and maintain a balanced approach between strengthening our balance sheet and returning capital to shareholders to maximize shareholder value."

A US share listing will enable a direct comparison in market capitalization between SK Hynix and Micron. Micron shares currently trade at $380.43 each with a price/earnings (P/E) ratio of 17.97 while SK Hynix shares in Korea, trading at ₩995,000, have a P/E ratio of 16.48. A higher P/E ratio implies a higher valuation.

Separately, SK Hynix has begun equipping its M15X fab’s second cleanroom two months ahead of schedule. Both cleanrooms are now being fitted with DRAM chip-making machinery. The chips will be used to build HBM stacks for GPU servers.