EP 183: SKHynix IPO, AI Model Wars, and NVIDIA Supply Chain Rumors

**Ben Bajarin** (0:05)
Hello, everyone, welcome to another episode of The Circuit. I am Ben Beharon.

**Jay Goldberg** (0:10)
Greetings, programs, I'm Jay Goldberg.

**Ben Bajarin** (0:13)
Well, this week, a very, what would you want to say, like ambitious listing happened in our United States market by SK Hynix.
While we'll talk about that, there's also some like nuances going on in memory to talk about, but let's talk about the SK listing. Walk us through, well, first of all, like walk us through why a company does this. I know, but let's just kind of level set, right? A company that's on the Korean Stock Exchange. I also wonder when I asked this question, do we think perhaps some other companies who are global participants who are on, and let's just say the Taiwan Exchange or in this case, Korea, is this something that others might do as well, as a talking point?

**Jay Goldberg** (1:15)
So, yeah, so SK Hynix had an IPO of, they raised $26.5 billion listing in the US for the first time.
And it's been a wild ride. The stock was up and then it was down, and it's up again. And it's been very interesting to watch because there's also a lot of complexity. The Korean market itself is moving in a lot of directions at once in big ways.
And so I think this was a pretty highly anticipated event, given it was pretty apparently it was very over subscribed, meaning there's a lot of US interest in this. And so I understand there are reasons for wanting to do this is, it comes down to the US equity market is the biggest equity market by by far in the world. And it has a much deeper pool of liquidity of more investors, more money. Korea has a pretty developed stock market, but it's just going to be smaller than what's in the US. And so I think companies sometimes want to do this because it gives them access to deeper pools of capital. And in particular, there's a possibility for it to re-rate. Like, you know, it doesn't apply so much to Hynix, but certainly other companies, they may be more appreciated in the US market than they are in their home market. There are also, in Hynix in particular, it was getting to the point where it was just too big for the Korean market, I would say. It was just like, you know, every, I don't know, I don't know if this is true, but my guess is like, almost everybody in Korea owns, who owns stock, owns some Hynix.

**Ben Bajarin** (3:03)
Right.

**Jay Goldberg** (3:04)
Where do you go from there?

**Ben Bajarin** (3:05)
Exactly.

**Jay Goldberg** (3:06)
And so this kind of helps them diversify their shareholder base and access more capital. Right.

**Ben Bajarin** (3:12)
Right.
And I think the interesting part is, I mean, I think you're right. We have a lot of friendlies in Korea. There are a lot of people who invest in Korean companies in Korea. And I think you're absolutely right about the opportunity for the pool. But also, like, let's just reflect, right? There is zero chance something like this happens if it wasn't for this memory thing that we're in. Like, traditionally, great, right? They were able to manage cyclicality, and both them and Samsung, and manage the digestion periods with reasonable, you know, capital, right, coming from the Korean market. I think, you know, perhaps they, being there, managed more effectively than Micron, right? For example, historically speaking.
But they would never do this, right? If it wasn't like, memory is all the rage, and it's not going away. And I thought their commentary was just interesting, too. I mean, when they only did their roadshow, I read some of the notes, you know, from the bankers' post. There was obviously, you know, comments from, you know, their chairman who was on TV saying, we don't think this is going to end until 2030, but we're still committed to being, you know, the largest memory provider in the world via, you know, the capacity we're going to bring on, on, et cetera, et cetera, et cetera. But anyway, my main point, right, that if memory wasn't doing what it's doing, this wouldn't even be a consideration.

**Jay Goldberg** (4:46)
Well, I mean, I'm sure that people have been asking them to do this forever, for as long as they've been public company in Korea. They've had bankers pitching them on doing a listing in the US. I think the memory cycle makes it more attractive to them, more interesting to them. They've gotten so big. Part of the problem is it's, US investors can buy Korean shares, but it's a hassle for retail investors. It's a hassle for institutional investors in a lot of cases. There are a fair number of US funds that probably can't buy Korean stocks. A lot of mutual funds have rules about geographic restrictions of where they can invest.