The semiconductor market is experiencing a moment of truth. The $28 billion American Depositary Shares (ADS) offering by South Korean giant SK Hynix has sparked a real frenzy among institutional investors. Demand exceeded supply by more than seven times, a powerful signal of confidence in the memory chip sector amidst global turbulence.
The main driving force behind this surge was the weakness of the Korean stock market. The KOSPI index briefly fell into "bear" territory this week, losing more than 20% from its peak levels. The decline in shares of SK Hynix and Samsung Electronics dragged down the entire index, prompting major players to seek a more stable haven in dollar-denominated securities.
Institutions Place Their Bets
Applications to participate in the offering were submitted by the world's largest funds with long-term horizons, including Baillie Gifford, Coatue Management, and Situational Awareness Partners. Collectively, they were prepared to invest up to $7 billion. Interest persisted even amid the extreme volatility of last week. The underwriters of the deal — Bank of America, Citigroup, Goldman Sachs, and JPMorgan Chase — informed investors that the final price would be determined after the close of trading in Korea, with allocation results announced on Thursday US time.
This offering became the largest since the June IPO of SpaceX ($85.7 billion) and the second largest in 2026. Notably, UBS recommended clients buy SK Hynix American Depositary Receipts and sell shares on the Korean market, expecting a higher valuation of the securities in the US.
Korean Market: Concentration of Risks
SK Hynix and Samsung Electronics now account for roughly half of the total capitalization of the KOSPI index. A year ago, their share was only about 25%. As noted by eToro analyst Xavier Wong, such concentration of orders in the hands of a few funds can amplify both rises and falls in quotes. There is no consensus on Wall Street either: JPMorgan and Morgan Stanley are making opposing bets on future demand for AI chips.
On Friday, pre-market trading of SK Hynix shares will begin on Nasdaq under the ticker SKHYV (when-issued mode), with main trading under the permanent ticker SKHY starting on July 13. International investors continue to buy dollar-denominated securities even after a sharp drop in share prices in Seoul over a single session.
My view: This valuation gap between the Korean and US markets is the key intrigue. If foreign buyers believe in the future chip demand cycle more strongly than investors in Korea itself, we could see a significant capital flow. The question is only how sustainable this "bullish" sentiment is amidst global macroeconomic uncertainty.