SK Hynix to List on Nasdaq at $26.5 Billion Valuation, Vindicating Early AI Chip Bet

SK Hynix is set to debut on the Nasdaq with a $26.5 billion listing, marking a significant milestone for SK Group Chairman Chey Tae-won, whose 2012 acquisition of the then-unprofitable chipmaker is now seen as a prescient bet on the future of artificial intelligence.

The bell-ringing ceremony on Friday will cap a remarkable turnaround for a company that has become a powerhouse in the AI supply chain, as reported by Reuters.

A High-Stakes Bet on HBM

SK Group's acquisition of Hynix in 2012 was widely viewed as a risky venture. The memory chip business is notoriously cyclical and capital-intensive, and at the time, Hynix was losing money and lagging behind competitor Samsung Electronics in both market share and technology.

Under Chey's leadership, SK Hynix pursued a long-term strategy focused on High-Bandwidth Memory (HBM), which was then a niche technology. This strategic wager paid off as the AI boom took hold, with HBM becoming an indispensable component for AI accelerators manufactured by companies like Nvidia. SK Hynix has since emerged as the world's leading producer of HBM chips.

The strategic importance of this partnership was highlighted by Nvidia CEO Jensen Huang in June. "SK is our largest memory partner. Without SK’s partnership, today’s AI industry would not have developed as wonderfully as it has," Huang told reporters in Seoul, according to Reuters.

Market Outlook and Headwinds

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Despite the current success, leadership acknowledges potential headwinds. In a speech in April, Chey noted the present memory supply shortage, stating, "this situation cannot last forever." His comments reflect an awareness of the industry's historical volatility.

These concerns are amplified by recent expansion plans. Following a government call to action, both SK Hynix and Samsung have pledged hundreds of billions of dollars for new chip manufacturing plants in South Korea. While aimed at meeting surging demand, these massive investments have raised investor concerns about a potential future oversupply, a recurring risk in the memory sector.

Leadership and Corporate Structure

Analysts attribute the company's success to Chey's strategic direction. Kim Dae-il, a former SK Hynix board member, told Reuters that Chey empowered executives from within Hynix, such as CEO Park Sung-wook, who championed the HBM strategy even amid internal skepticism.

Chey, whose wealth is estimated at $5.4 billion by Forbes, is not a direct shareholder in SK Hynix. According to the report, he is the largest shareholder of SK Inc, which in turn holds a 32% stake in SK Square, the top shareholder of SK Hynix.