There Are 100 Trillion Reasons to Watch the Upcoming U.S. Debut of SK Hynix Stock

It's no secret that memory companies are making bank currently, with Samsung's 19-fold jump in profits, above giants like Nvidia (NVDA). However, that's not the only memory play, and Samsung's biggest competitor, SK Hynix, is also making strides.

In fact, SK Hynix holds an estimated 56-62% global market share in High Bandwidth Memory (HBM), whereas Samsung holds ~17%. This figure alone should be more than enough of a reason to look deeper into the moves the company is making.

Perhaps it could even hand you an early opportunity to prepare for the next explosive IPO.

SK Hynix Makes Moves Ahead of a Blockbuster Debut

The company is planning a blockbuster Wall Street debut. It aims to raise up to $29 billion by listing American Depositary Receipts (ADRs) on the Nasdaq ($NASX) under the SKHY ticker. This is expected to be one of the largest new share sales globally and is reportedly already seven times oversubscribed.

As it prepares to debut, the company is making sure it has the capacity to expand rapidly with demand. SK Hynix announced a 100 trillion won (or $64.4 billion) investment program to channel into new semiconductor manufacturing facilities in South Korea. 80 trillion of that is going into a plant that will produce NAND flash memory and enterprise SSDs, with 20 trillion going to an advanced packaging hub.

Another separate investment worth looking at is an 11.9 trillion ($7.3 billion) investment in ASML (ASML). The company makes the world's most advanced EUV machines that can print nanometer-scale circuits onto silicon wafers.

Very few companies are making moves into so many AI hardware sectors all at once.

The Second-Largest IPO in History?

By proceeds, SK Hynix will be the second-largest IPO if it raises $29 billion. SpaceX (SPCX) raised $85.7 billion. SK Hynix is Nvidia's primary supplier of HBM, so the market has good reason to slap a big premium on the stock.

This won't be SK Hynix's first rodeo, since the company has been publicly traded for three decades. It went public on the Korea Exchange in 1996 and is now pursuing a cross-listing to tap the U.S. capital markets directly. SK Group Chairman Chey Tae-won said this will ensure the company's "true corporate value" is recognized.

In any case, this is a smart move since SK Hynix, by putting itself in front of the same investor base valuing Nvidia and Micron (MU), will let it raise tremendous amounts of cash and balloon to much higher valuations.

How Big Could SK Hynix Get?

SK Hynix's market cap crossed $1 trillion in May and kept rising until late June. It has since pulled back below that number, as it is down 29% from its peak. Most memory stocks have corrected, but this does not mean that the steam has run out. The U.S. offering could lead to renewed momentum well above $1 trillion, as it will unlock much more capital.

The scheduled debut date is July 10, with ADRs expected to be around $166 per share. Per HSBC, the stock could be worth ~$200 due to market demand for semiconductor stocks. Baillie Gifford, Coatue Management, and Situational Awareness Partners have already signaled interest in buying up to $7 billion of shares combined.

If the broader market rally continues, SK Hynix could overtake Samsung in market cap and trade close to $2 trillion in a year or two. The forward PE ratio is just 8.3x. That's fair if you compare it to other memory companies since the market still considers the ongoing surge as a cyclical one. But if demand lasts for years, you could see the premiums surge industry-wide.