The South Korean market goes straight from ICU to KTV! SK Hynix's $29 billion ADR triggers a surge in capital inflows, leading to a "stock and currency rebound" with top storage giants.

According to a knowledgeable source within the South Korean government, South Korean officials are preparing for the issuance of American Depositary Receipts (ADRs) on the U.S. stock market by the semiconductor giant SK Hynix Inc, and as a result, the South Korean won has strengthened. At the close of the South Korean stock market on Friday, the benchmark KOSPI index rose nearly 6% under the strong rebound of the stock prices of the two major storage giants - SK Hynix and Samsung Electronics. SK Hynix, Samsung Electronics, and even the South Korean stock market saw a strong rebound from the sharp drop and freeze on Thursday to the strong rise on Friday, with the South Korean won exchange rate and the stock market seemingly rallying together from an ICU to a KTV on Friday. According to the unnamed individual requesting confidentiality due to the sensitive nature of the matter, the storage chip manufacturing giant is expected to begin using forward contracts as early as Friday to hedge the fund flow generated by its over $29 billion issuance of American Depositary Receipts, with the settlement scheduled for July 14th. Although these ADRs are denominated in US dollars, SK Hynix has stated its intention to repatriate a portion of the funds raised from the listing back to South Korea for investment, indicating that the company will need to buy a large amount of Korean won. This week, SK Hynix has submitted a revised F-1 registration statement to the U.S. Securities and Exchange Commission (SEC) to list its stock on the Nasdaq market. The company plans to list its American Depositary Shares under the ticker symbol "SKHY". SK Hynix is actively seeking to raise 45.45 trillion won (294 billion dollars) through its listing on the U.S. stock market, capitalizing on the strong demand from global investors for the stocks of storage chip supergiants whose prices have skyrocketed in recent years. The plan for SK Hynix to go public in the U.S. has attracted a flood of funds, coupled with the incredibly strong performance and outlook recently announced by the U.S. storage giant Micron Technology, Inc., underscoring the fact that the supercycle for storage chips is far from over. While Micron validates the real strength of demand, SK Hynix validates the fervor of capital pursuit, highlighting that investors are still willing to pay a premium for "storage chip supply bottlenecks". As the storage chip giants flock to the U.S. for funding, the South Korean won has seen a significant rebound from a nearly 20-year low Behind the rare rally of the South Korean won, SK Hynix, and Samsung stock prices on Friday is the resonance of the exchange rate fund flow, AI storage fundamentals, and the continuous discounting of the South Korean stock market valuation. Especially on the exchange rate side, SK Hynix's American Depositary Receipt issuance plan to raise up to approximately $29.4 billion will be used for capital expenditures in South Korea, including local semiconductor fabs, equipment purchases, and EUV lithography machines. If some of the dollar funds flow back to South Korea and are converted into Korean won, it will increase the supply of dollars in the Seoul foreign exchange market and alleviate the pressure of won depreciation. On the stock side, on Friday, SK Hynix closed at 2,425,000 Korean won, up approximately 10.88% from the previous close of 2,187,000 Korean won, reaching a high of 2,454,000 Korean won during the day, with a maximum intraday increase of approximately 12.21%. Samsung Electronics closed at 309,500 Korean won, up 8.22% from the previous close of 286,000 Korean won, reaching a high of 313,000 Korean won during the day, with a maximum intraday increase of approximately 9.44%. The strong rise in the South Korean stock market on Friday highlights the swift return of funds to the stronger fundamental trend after the panic selling triggered by the "AI compute surplus/Meta compute sell-off" earlier this week: the massive construction of AI server clusters requires an almost endless supply of HBM, server DRAM, and enterprise-grade SSDs, and the two Korean storage chip giants are at the core of global AI storage supply. "Seemingly, the South Korean government is closely monitoring the issue of exchange rate stability, so I think the company may support exchange rate stability by bringing dollars into the country," said Park Sang-hyun, an economist at iM Securities Co. However, he noted that the amount of exchange ultimately depends on SK Hynix. "In terms of scale, this is of course significant. The figure of $29 billion is roughly equivalent to nearly a month of net foreign selling," he added. The South Korean won rose sharply by 1% on Friday to 1,530.50 Korean won per US dollar, after having fallen by as much as 0.7% earlier. The Korean won is still one of the worst-performing currencies in Asia this year, with a depreciation of over 5% since the beginning of the year, and it flirted with the lowest level in nearly 20 years before the significant rebound on Friday. Statistics from the Korea Exchange show that foreign investors sold approximately $30.5 billion worth of South Korean KOSPI index component stocks last month due to the continuous depreciation of the Korean won. A spokesperson for SK Hynix stated in a statement that the company is considering various options but has not confirmed any details. SK Hynix is capitalizing on the strong demand from Wall Street and global institutional investors for the stocks of storage chip giants whose prices have been skyrocketing since the second half of 2025, and has announced plans to accelerate the expansion and construction of storage chip capacity projects in South Korea. The inflow of foreign exchange from the dollar raised through this US listing will be a rare source of support for the struggling South Korean currency. SK Hynix's issuance of $29 billion in ADRs triggers a flow of funds back, which can be considered a "shot in the arm" for the South Korean won! The increasing prices in the storage cycle provide an "earnings anchor" at the industry level for this round of stock and currency counterattacks. TrendForce predicts that in the second quarter of 2026, traditional DRAM contract prices will rise by 58%-63% QoQ, and NAND Flash contract prices will rise by 70%-75%, while noting that North American cloud service providers are accelerating AI inference deployments, driving demand for AI servers, general-purpose servers, high-capacity RDIMMs, and enterprise-grade SSDs. Suppliers are continuing to redirect capacity to HBM, server DRAM, and enterprise-grade SSDs, resulting in a tight overall supply. As a core supplier of high-bandwidth memory (HBM) required for AI systems such as NVIDIA Corporation and Alphabet Inc. Class C, SK Hynix may be valued at multiples comparable to companies like Micron Technology, Inc. in the US stock market, which could lead to a reevaluation of its domestic stock. From an industrial engineering perspective, HBM is no longer just a regular storage component, but a critical constraint that determines the throughput, power efficiency, and inference concurrency capability of GPU/ASIC clusters; SK Hynix's financing through the US stock market locks in the capacity of its Paju and Cheongju advanced packaging and EUV production ahead of time, essentially securing the "memory bandwidth supply right" in the era of AI computation scarcity. Goldman Sachs Group, Inc.'s June DRAM study revealed that the pricing power of HBM is being re-anchored by the scarcity of traditional DRAM. Spot prices for DDR5 have risen by 20% since May 1st, with a premium of up to 25% over contract prices, while DDR4 has risen by 11% with a premium of up to 45%, indicating that the spot market is significantly leading the contract market, with ongoing upward pressure on contract prices. More importantly, Goldman Sachs Group, Inc. has significantly raised its forecast for Samsung's 2027 HBM price increase from +14% to +44%, and believes that with the tight supply and demand for HBM, as well as the widening price gap between traditional DRAM and HBM, there is still upward pricing risk. The specific amount of capital raised and issued will depend on the exchange rate, but based on the proposed scale, SK Hynix's issuance of American Depositary Receipts will be among the top three largest initial public offerings in global stock market history. According to data compiled by institutions, it will be on par with the super IPO of Saudi Aramco in 2019 of $29.4 billion, with the largest IPO globally being SpaceX, founded by Elon Musk, with an unparalleled fundraising scale of at least $75 billion. Whether it is the immensely large TPU AI compute clusters of Alphabet Inc. Class C or the massive AI GPU compute clusters of NVIDIA Corporation, both require fully integrated HBM storage systems with AI chips. A large-scale purchase of server-grade DDR5 storage and enterprise-grade high-performance SSDs/HDDs is necessary for technology giants to accelerate the establishment or expansion of AI data centers. Samsung Electronics, SK Hynix, and Micron Technology, Inc. are coincidentally at the core of these three most critical storage areas: HBM, server high-performance DRAM (including DDR5/LPDDR5X), and high-end data center-level SSDs, making them the most direct beneficiaries in the "AI memory + storage stack," and reaping the "super dividends" of AI infrastructure wave. As the core supplier of high-bandwidth memory for AI chip leaders such as NVIDIA Corporation, SK Hynix's listing in the U.S. also marks a milestone in its extraordinary rise. After becoming the preferred HBM supplier for the AI chip superpower NVIDIA Corporation in the global monopolistic position, it has become the largest HBM market share supplier for high-bandwidth memory component systems (HBM systems) globally, surpassing its long-time South Korean rival Samsung Electronics in market value and overall DRAM market share. Nomura is currently the most bullish Financial Institutions, Inc. on the storage chip sector. In a recent research report, Nomura raised its target price for Samsung Electronics from 340,000 Korean won to 590,000 Korean won, and for SK Hynix from 2,340,000 Korean won to 4,000,000 Korean won, representing potential upside of approximately 118% and 120%, respectively. Nomura's core bull logic is that AI has transformed storage from a traditional PC/mobile cycle product into a long-term growth asset for data centers: intelligent AI inference requires massive key-value caching (KV Cache), and HBM supply significantly lags behind demand. Nomura expects global data center capital expenditures to increase from $1.16 trillion last year to $6.13 trillion by 2030, with the share of memory investment in data centers expected to rise from the current 9% to 23%, meaning that Samsung and SK Hynix are significantly undervalued at about six times the forward P/E ratio of 12 months ago, with potential for a revaluation towards a valuation system similar to Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR at about 20 times.