Trillion-Dollar Chipmaker SK Hynix Lands on Nasdaq

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Daniel Bach (0:33)

South Korean chip giant SK Hynix lands on the NASDAQ, the latest blockbuster AI listing.

Plus, the EU says Meta failed to protect Instagram and Facebook users from harm caused by addictive apps. And Israel shares details of an Iranian plot to kill President Trump.

Anat Peled (0:49)

We did see during the big funeral for the Iranian Ayatollah Khamenei, people were chanting, calling for Trump's death. There was even a banner that read, we will kill Trump. Some of this was out there. What the Israelis are saying is that there was a specific plot, something more concrete.

Daniel Bach (1:05)

It's Friday, July 10th. I'm Daniel Bach for The Wall Street Journal, filling in for Luke Vargas. And here is the AM edition of What's News, the top headlines and business stories moving your world today.

The artificial intelligence boom is showing no sign of letting up, with memory chip maker SK Hynix raising more than $26 billion for its US listing today. The South Korean ship maker is the latest global company to surpass $1 trillion in market value, and the NASDAQ listing could supercharge its business by giving it access to the world's deepest pool of capital. For more on this, I'm joined by Asia Business and Finance editor Peter Landers. Peter, this is a blockbuster listing, and it seems investors are quite keen to get in on the trade.

Peter Landers (1:47)

Yeah, I think you'll see a lot of US investors taking an interest in this company. Until now, it's been traded only in the South Korean stock exchange. So for the most part, American investors have been watching from the sidelines as it surpassed $1 trillion in market cap. Now, they can simply buy an ADR on NASDAQ and it's very easy. So I think investors who maybe are looking for more AI-related companies will certainly take a look at SK Hynix.

Daniel Bach (2:14)

The money that SK Hynix is trying to raise would rank among the biggest share sales in history. What do we know about what they plan to do with that money?

Peter Landers (2:21)

SK Hynix is raising more than $26 billion from US investors and they've said they principally plan to spend it in their home country of South Korea, building more memory chip factories, buying more equipment for their factories just to expand capacity. Because the biggest issue for the company right now is they don't have enough product to serve to their customers. The customer is demanding more and more memory chips and the Trump administration is probably looking to get them to invest even more in the US and perhaps build some of their core products at US factories. They are not saying that the money raised in this listing will be used for US factories, but perhaps in the future if they raise even more money from US investors, they might consider investing further in the US production.

Daniel Bach (3:06)

And those capacity questions and the sheer cost of the build out to meet demand has also fueled recent volatility in tech stocks. What do you make of the timing from SK Hynix here?

Peter Landers (3:15)

I think they want to take advantage of this AI boom. In South Korea, the shares of SK Hynix have been up, I think, more than eight times over the past year, and a lot of US investors want to get in on that growth story. The profits of this company, SK Hynix, are enormous. Analysts expect it to reach near the $150 billion of net income this year, and that's quite a feat for a company that was losing money three years ago.

The risk here is that the AI growth story turns around, and the profits and revenue that these companies have been seeing and the incredible growth suddenly comes to a halt. Maybe there's too much AI investments. You see a lot of companies building data centers in anticipation of future demand by companies, but the cash flow going into AI has not yet matched the valuations of the companies in this business, and the assumption is that a huge amount of money, cash, will be given to these AI companies in return for their AI services, and if there's any doubt cast on that growth story, then the whole structure underlying the AI boom in the stock market could fall apart, and that would affect everyone, whether it be Anthropic or OpenAI, SK Hynix, Microsoft, the hyperscalers, Google, Nvidia, and many others. All of these companies are part of ultimately the same industry, and if the industry's growth prospects are clouded, then they all fall together, undoubtedly.