On the eve of heading to the US, SK Hynix crashed like a dog.

Original | Odaily Planet Daily (@OdailyChina)

Author | Azuma (@azuma_eth)

SK Hynix's U.S. listing process has entered its final stage, but just before this Korean memory giant is about to land on Nasdaq, the narrative of the AI and semiconductor industry has taken a sudden emotional turn in a very short time.

On the evening of July 1, the news that "Meta may release excess computing power" triggered speculation that big companies might cut capital expenditures, thereby causing drastic market volatility. As the narrative of "absolute scarcity" of AI computing power began to loosen, the semiconductor memory chip sector was directly hit, and related concept stocks collectively experienced massive pullbacks in the secondary market — SK Hynix's Korean stock closed down 14.57%, losing over a hundred billion dollars in market value in a single day.

• Odaily note: See "The 'biggest negative' for chip stocks is finally here? Will Meta be the first big company to cut capital expenditures?"

SK Hynix's Countdown to U.S. Listing

On June 30, SK Hynix filed an F-1 prospectus with the U.S. Securities and Exchange Commission (SEC), planning to list on Nasdaq by issuing "American Depositary Receipts" (ADRs), with a planned fundraising scale of about 45.45 trillion won (approximately $29.4 billion), making it one of the largest ADR issuances in history. All proceeds from this fundraising will be used for domestic capacity expansion in Korea, including the Yongin wafer fab, the Cheongju advanced packaging production line, and investment in EUV and related equipment.

• Odaily note: The so-called ADR is essentially a trading vehicle for non-U.S. companies in the U.S. stock market. ADRs are not U.S. stocks directly issued by the company, but "substitute securities" issued in the U.S. by a depositary bank, backed by the ordinary shares of the overseas company. Through ADRs, investors can directly trade foreign company stocks in the U.S. stock market in U.S. dollars, without needing to open cross-border accounts or handle foreign exchange and settlement procedures.

This transaction is jointly underwritten by Bank of America, Citigroup, Goldman Sachs, and JPMorgan Chase. A total of 17.79 million new shares will be issued (accounting for 2.5% of its total issued share capital), with the stock ticker being SKHY. In terms of timing, the ADRs are expected to begin trading on Nasdaq on July 10.

The reason SK Hynix chose to actively push forward its U.S. listing in the current cycle is essentially the result of the convergence of three factors: the industry cycle, capital window, and competitive structure.

First, SK Hynix is currently in a historically strong cycle. Driven by AI server demand, High Bandwidth Memory (HBM) has become the most critical supply bottleneck. The company's market share in this field exceeds 50%, while also driving its overall DRAM business into a high-profit phase. This has also pushed its performance and stock price into an upward channel simultaneously, forming a typical "peak-cycle financing window" — large-scale capacity expansion financing during the strongest phase of fundamentals.

Second, from the perspective of capital market structure, the U.S. market remains the primary pricing center for global AI assets. Whether it's Nvidia, AMD, or memory chip companies like Micron, the U.S. stock market overall gives the AI industry chain significantly higher valuation centers and liquidity premiums. In contrast, the Korean market has long suffered from what is called the "Korea discount," where similar semiconductor assets are generally valued lower than their U.S. counterparts. Therefore, one of the core significances of SK Hynix issuing ADRs in the U.S. is the hope of re-pricing the company within a higher valuation system.

Finally, memory giants are in the midst of fierce capacity expansion competition, and capacity expansion is highly dependent on sustained massive capital investment. SK Hynix's near $30 billion fundraising this time will all be used for wafer fabs, advanced packaging, and equipment expansion, essentially seeking to convert capital advantages into capacity advantages.

After Falling This Badly, Is Hynix Still Worth Buying?

Originally, SK Hynix's U.S. listing could be seen as a historic moment for the memory industry, but the sharp pullback that began last night has temporarily injected great uncertainty into its future. Should we take the opportunity to buy the dip and wait for a rally after the U.S. listing? Or should we decisively reduce positions to avoid a potential bubble burst?

Disclaimer: The following section is purely personal opinion and does not constitute investment advice.

In my personal view, this sharp decline in SK Hynix, including the significant pullback in the sector, is more like a liquidity stampede driven by amplified sentiment rather than a substantive reversal of the industry trend.

First, let's focus on the fuse in the news — "Meta may release excess computing power." This news itself has been overinterpreted.

When Bloomberg first published this news, the headline was "Meta Is Building a Cloud Business to Sell Excess AI Compute," but it was later changed to "Meta Is Planning a Cloud Business Sell AI Computing Power." However, other media outlets including Reuters had already reposted using the first headline.

There are two key changes between the two headlines: first, "is building" was changed to "planning to build," directly weakening the certainty and timeliness of the report; second, the expression "excess" was deleted, but this initial phrasing was easily interpreted by the market as "computing power is already excess," leading to a chain of reasoning from "excess computing power → capital expenditure peak → weakening AI demand," ultimately causing market panic.

Even if we concede that Meta is indeed selling computing power, it is still difficult to constitute a reason to conclude that the "AI capital expenditure cycle" has ended. From an industry logic perspective, Meta itself is relatively behind in the AI race, and its pressure on foundation models and computing efficiency objectively means that Meta has some degree of computing power scheduling and asset optimization needs. In this context, the externalization or commercialization of some computing resources is more akin to an asset utilization optimization behavior rather than a systematic contraction on the demand side.

This kind of "computing power redistribution" is not uncommon in the AI industry chain. Two months ago, SpaceX also commercially partnered with external parties for some of its computing resources (e.g., renting to Anthropic). Essentially, this is just a rebalancing for cost and resource efficiency, not a denial of AI demand itself. Therefore, directly extrapolating a single company's uncertain-scale computing power scheduling behavior into "industry oversupply" involves a clear logical leap.

As for why this news had such a huge destructive power, another key reason lies in the market structure. Before this decline occurred, the semiconductor memory chip sector itself was already at a relatively high level, with a high concentration of trend capital and leveraged ETFs. Under such a structure, the market's sensitivity to marginal information increases significantly. Once a narrative shock occurs, it easily triggers amplified deleveraging and passive position reduction, thereby amplifying a fluctuation that originally belonged to the "expectation adjustment level" into a "price stampede level" pullback.

Therefore, this pullback is more like a typical result of the superposition of "sentiment panic + structural deleveraging." I personally tend to take the opportunity to add positions during this decline.

After all, SK Hynix itself is in a critical window for its U.S. listing. With a fundraising scale close to $30 billion, whether it's the underwriters or the institutional funds participating in the subscription, they should not want the stock price to perform too poorly after the listing, right?