SK hynix. [Reuters]
SK hynix. [Reuters]

SK hynix's US American depositary receipt (ADR) offering has been oversubscribed "multiple times," Bloomberg reported Monday, citing sources.

Demand was strong from the outset, driven by large institutional investors with stable, long-term mandates as well as technology-focused funds, according to the report. About 1,000 institutional investors attended a roadshow held Monday. The offering price is to be determined Thursday afternoon New York time.

Three major investment firms — Situational Awareness Partners, Baillie Gifford and Coatue Management — have indicated they intend to buy up to $7 billion worth of shares in the offering, Bloomberg added.

"For US investors, Korean equities — particularly memory chip names — remain a relatively scarce and hard-to-access asset," said Nori Chiu, director of investments at WhiteOak Capital. "That scarcity value will underpin demand."

However, the deal is proceeding amid some of the most intense volatility in global semiconductor shares in recent years, Bloomberg said, flagging it as a key risk factor.

SK hynix's share price has fallen 17 percent this month and is down about 9 percent from the ADR reference price of 242,500 won ($158) listed in filings with the US Securities and Exchange Commission (SEC). As a result, the offering size, which had been expected to reach $29 billion at the end of last month, could shrink to around $28 billion.

Much of the volatility traces back to news on July 1 that Meta Platforms would launch a cloud business renting out surplus AI computing resources. The announcement sparked fears that demand for high-bandwidth memory (HBM) chips may not continue to grow, dragging the Philadelphia Semiconductor Index down more than 10 percent over two sessions.

Analysts also point to a structural amplifier: a $13 billion 2x leveraged exchange-traded fund tied to SK hynix's share price that mechanically rebalances daily to maintain its target multiple, compounding the stock's volatility in the process.


yckim6452@heraldcorp.com