SK Hynix Plans U.S. IPO to Capitalize on AI-Driven Memory Chip Demand

South Korean memory chip manufacturer SK Hynix, a rival to Samsung and U.S.-based Micron, announced on Monday that it plans to sell nearly 17.8 million shares in a U.S. initial public offering (IPO). If the shares sell well—and there are indications they will—the company could raise approximately $28 billion, based on SK Hynix's closing share price last Friday in Seoul, according to Bloomberg.

SK Hynix will offer American depositary receipts (ADRs), a type of certificate that allows U.S. investors to buy a foreign stock without trading directly on an overseas exchange. Each ADR will represent one-tenth of a common share. Pricing is expected on Thursday, with trading beginning on Friday.

Like Micron, SK Hynix is riding an AI-fueled boom credited to artificial intelligence for both sales and stock price growth. The company reported first-quarter revenues up nearly 200% year-over-year, and its stock has risen about 260% so far this year. This is because AI systems are highly memory-intensive.

As hyperscalers such as Amazon, Microsoft, Google, and Oracle race to build so-called AI factories, and as new AI data centers multiply nationwide, demand has outpaced supply, leading to a shortage of memory chips—including High Bandwidth Memory (HBM), DRAM, and NAND, the different types of chips that store and move data inside AI systems. The situation has been dubbed 'RAMageddon.' Apple executives said the shortage is forcing the company to raise prices on Mac computers and iPads.

South Korean tech companies, led by SK Hynix and Samsung, have pledged to spend over $550 billion on building out new manufacturing capacity to keep up. However, this is a risky venture. By the time those facilities are built, memory needs for AI may change, potentially leaving them with more supply than the market wants and potentially crashing prices.

For now, Wall Street is looking for the next Nvidia, and memory chip makers are among the closest options available. Micron, the closest U.S. comparison, has surged nearly 700% over the past year to a valuation of more than $1 trillion, fueled by record AI-driven memory demand and revenue.