The South Korean memory chip manufacturer SK hynix has just completed the largest-ever U.S. listing by a foreign company, with its shares surging 13% on their first day of trading.
The rationale behind this historic listing is straightforward: betting that the artificial intelligence boom has fundamentally reshaped the decades-long boom-and-bust cycle that has defined the memory chip industry. SK hynix raised $26.5 billion through an American Depositary Receipt (ADR) offering, with a significant portion earmarked for expanding chip manufacturing capacity—something the broader industry has been reluctant to do for years due to past experiences with painful oversupply.
"We have always been a cyclical industry, so we've had ups and downs before," said SK hynix CEO Kwak Noh-Jung in an interview. However, "the situation has clearly changed," he stated.
The advent of the ChatGPT era has led to a persistent shortage of memory chips, impacting every part of the supply chain and driving up prices for products ranging from iPads to Xbox consoles.
Kwak Noh-Jung noted that customers are now approaching SK hynix to secure long-term supply agreements. "They believe the supply shortage will last longer," he said, later predicting that this tight supply situation could potentially persist beyond 2030.
This same expectation underpins data center investment plans worth trillions of dollars, funded through various financial channels like private credit and corporate debt. Companies including Alphabet (Google's parent), Amazon, Meta, Microsoft, and Oracle have collectively added roughly $350 billion in debt over the past five years to purchase the hardware needed to support their AI strategies.
Naturally, there are also many skeptics. Some prominent Wall Street figures, including "Big Short" investor Michael Burry and Bridgewater founder Ray Dalio, have warned that the AI bubble will eventually burst. After all, even the largest and most successful AI developers have yet to prove their models and tools can be profitable.
For now, however, SK hynix and other memory chip giants like Samsung Electronics and Micron Technology—key beneficiaries of the AI investment frenzy—are soaring. The boom is driving demand not only for traditional memory chips but also for High Bandwidth Memory (HBM), a new generation of product required for AI systems.
"I believe demand will grow, and our supply capacity will never be able to keep up," said SK Group Chairman Chey Tae-won in an interview. He suggested that the supply-demand balance for memory chips might not normalize until after the achievement of artificial general intelligence. "Until then, we need a huge amount of memory," he said. SK Group holds a controlling stake in SK hynix.
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