Special Edition: SK Hynix Debuts in US, Opens 14% Above Offer Price

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Bloomberg Tech is live from the heart of Silicon Valley with Ed Ludlow in San Francisco. Welcome to a special edition of Bloomberg Tech. I'm David Gurray in for Ed Ludlow, who I should say is not far away. He is down at the NASDAQ because all eyes are on SK Hynix's U.S. listing today. This is the biggest ever U.S. listing by a foreign company. And we are gearing up on this Friday. We're going to take a look at shares of the NASDAQ 100 down this morning. The semiconductor index down as well. Stocks really wavering here ahead of the debut of this listing on the NASDAQ. We're going to look at some chip stocks as well as some rivals of SK Hynix if we can. Of course, a lot of interest in sort of where they are, how they're performing on this Friday. Micron down 1.3 percent. Intel down 2.9 percent. NVIDIA up slightly again on this Friday. I want to get some context here, some perspective from Bailey Lipscholtz. He's a Bloomberg tech equity reporter along with Vandeep Singh, who's a senior analyst at Bloomberg Intelligence. And Bailey, let me start with you. The offering price here, $149. The indications are this is going to open at $175. What does that tell you? And just walk us through what we can expect here in the minutes and hours ahead. David, it shows us that the reporting we had last night, that there were $200 billion of demand, is pretty darn online. The main thing to keep in mind is indications are only that. When we saw SpaceX go public, the indications were it opened up 30 percent and ultimately opened up 10 percent or 11 percent. So these numbers can move around quite quickly. The main thing to keep in mind, this is a record-setting listing for a foreign company here in the U.S. This is a big deal. Again, it was more than seven times oversubscribed. that drew in interest from fundamental investors as well as our typical IPO buyers. The one thing to keep in mind throughout today and really going into next week, we are looking at a company that is a new listing here in the US. So limited supply available for investors. As you can see, 117.9 million ADRs, not really a lot of shares available relative to the float. So you can be bracing for some volatility that is outsized against the tape that has seen semiconductors really moving pretty sharply in either direction for the last few months. Noting that volatility even as we wait for the open here. And Mandeep Singh, let me turn to you and just ask you about the motivations for this South Korean company to get into the U.S. capital markets. Simply more access to cash? Does it say something about their designs, their eagerness to get into the U.S. market more fully? How do you read what they're doing here today at the Nasdaq? I mean, I almost feel like these companies have become more household names, you know, with this AI cycle, nobody knew about SK Hynix, you know, probably two, three years back. And suddenly everyone is talking about memory shortages and how these companies have fundamentals that can really last a while in terms of the durability of this cycle versus the prior cycles. And so from that perspective, you know, having the ADRs listed here will create more awareness among especially long-term investors who would want a piece of this. And I think the timing seems to be perfect for the listing here. Maybe not a household name, but a big part of the pantheon of memory providers here situated for us, if you would. So you've got SK Hynix, you've got Samsung, you've got Micron as well. Where is it in that universe? Well, so I look at SK Hynix as one of the primary providers to an NVIDIA. So even though it's an oligopoly with three players, but when you look at, you know, which of the three NVIDIA has used the most for their, you know, architecture so far, it's been SK Hynix. And that's why in their IPO document, they say they have a 57% share in HBM. And HBM is where, you know, you can make a direct connection to the AI data center footprint. So from that perspective, I do think, you know, the NVIDIA aspect is huge when it comes to this listing. Bailey, I want to ask you about what the price of this is relative to the stock trading on the South Korean market. So there's no discount here if you're to buy the ADR on the Nasdaq today. What does that tell you about this company's confidence? It's the expectation, David. When we saw this price at about a 3% premium, that was kind of baked into what management had been being vocal about on the road when meeting with investors and their bankers when they're talking to clients who participated in the IPO. The main thing to keep in mind is Taiwan Semi trades at about an 18% premium relative to its Taipei listing. So if you do the math on where SK Hynix closed in Seoul and call it apples to apples, that's about $171 per ADR here in the US. So obviously opening potentially higher than that. Again, there are a number of factors at play. There's a lot of excitement to Mandeep's point on how SK Hynix fits into this. Obviously, the main thing people also have been keeping an eye on, and we've reported on ad nauseum, is that gap from a premium perspective or valuation perspective relative to micron. Yeah, so a lot of volatility here, a lot of confidence as well, just looking at that stock, how it's traded in South Korea, a lot of volatility in that stock in particular here over these last few weeks. I want to bring back Bloomberg Tech Equity reporter Bailey Lipschulz now, along with Mandeep Singh of Bloomberg Intelligence. And Mandeep, let me start with you and this issue of cyclicality. You know this sector so well, and the chairman laid out, we associate the cycles, the booms and busts of memory with if you have to buy a smartphone, if there's an uptick in that or in computing or any number of electronics in the home. He said in that conversation, the AI sector, this AI era presents something different. Yeah, and he kept hinting at how agentic AI could be a huge unlock in terms of memory demand. And he mentioned KVCache, the key value cache that agents use, a lot more than what the humans would end up using in their chatbot experiences. So in his mind, the drivers of this cycle are durable in terms of extending the length of this cycle. He did say the stock market can run up, but in terms of the fundamentals, he feels a lot more confident. And he talked about, you know, adding a certain gigawatt capacity both within Korea and outside. So it sounds like this company is going to ramp up its CapEx in a big way. I mean, they're investing, what, $35 billion? That's the reference he used. They're making that kind of money in a quarter. So, you know, from that perspective, there is room for CapEx to go high if he's that confident about the business. And Deep, you and I have talked so much about these bottlenecks and the amount of demand that's placed on a company like SK Hynix. So fascinating to hear him talk about how he likes the long-term deals that have been animating this company. Talk a bit about that, their approach to dealing with their customers. Yeah, I mean, traditionally, you know, their customers would prepay for a one-year contract. But now they're talking about three- to five-year contracts with the customers where the prepayment could be up to 30%. And, you know, Micron has even locked in the prices. They haven't done that. they are more in that camp of letting the spot prices determine what companies have to pay. But look, if you want to be a big customer of SK Hynix, it's very clear you have to have a three to five year commitment and you have to prepay certain amounts. So from that perspective, they seem to have a lot of levers this time around in terms of showing some backlog to investors. And that's what drives the CapEx investments I think that he's planning to make. Bailey, turning our attention back to this ADR, priced at $149. Latest indication is it would open at around $171. You heard from the chairman talking about the prospect of there being more ADRs in the future, maybe enlarging that number some, his appetite for maybe hitting the debt markets as well. Of course, he said his first priority here is stabilizing that stock price. But what did you learn from him from that conversation about the way that this company is going to approach the capital markets going forward? No, David, I think it's an interesting point that there is seemingly an interest in selling ADRs because the question has been, if you're selling shares here in the U.S., is it strictly to squeeze or narrow the valuation gap with a micron? Is it trying to entice a new investment group? Or is it another venue to potentially raise capital? So with the notion that they could sell ADRs in the future once there's some form of stability, that's a big deal for U.S. investors. That would be a big deal to building out some of those ambitions that Mandeep was mentioning. When you talk about a company that is pretty much taking over from the hyperscalers in terms of bringing in free cash flow, the question then is how do you invest and stay ahead of competitors or at least better compete with your biggest peers? And that question comes back to funding. Is it coming from the free cash flow from these sales or is it going to be tapping ADRs? Is it going to be selling U.S. dollar denominated debt? again because these are businesses that cost a lot of money. Bailey, thank you very much, Mandeep. Thanks to you as well. Bailey Lipschulz, Mandeep Singh joining me here in New York as we begin to analyze and pick apart the conversation that Ed Ludlow had there with the chairman of SK Group, Che Taewon. We're going to continue to do that over the course of this hour. Nancy Tangler, the CEO and CIO of Laffler-Tangler Investments is going to join us next with her analysis of SK Inix's U.S. debut. That's coming up on Bloomer Tech. With the highest number of young STEM graduates per capita in the EU, Ireland has the people and skills your company needs to succeed here. IDA Ireland, the National Investment Development Agency, can help you find and nurture the people you need to internationalise and thrive. Our talent is just one of the extraordinary benefits Ireland has to offer. Learn more at idaireland.com. Invest in extraordinary. Welcome back to Bloomberg Tech. David Gurra in for Ed Ludlow, who is at the NASDAQ on this Friday. Let's get the latest on where markets stand with Bloomberg Sahara Anand. Hi, David. We are still waiting on SK Hynix ADRs to begin trading But as we await that we are seeing the broader market treading water But the Nasdaq down about two of one percent while the Philadelphia Semiconductor Index is down about nine of one percent as investors continue to flip on whether those chip makers can keep their pricing power. And here's a check on some of the biggest names in the chip trade as we get ready to absorb all this new supply from SK Hynix. We are seeing Micron, Intel, and Western Digital falling. And while NVIDIA is bucking the trend, rising 2.25%, but Micron is the one to watch here since until today, it was effectively the only U.S.-listed pure-play way to invest in AI memory. David. Yaira, thank you very much. That's Yaira Anand joining us here in New York. We're going to stay with chips. SK Hynix's NASDAQ listing comes as the industry is facing a big memory bottleneck. bottleneck. Nancy Tangler, CEO and CIO of Laffer Tangler Investments, joins us now for more. Nancy, Ed Ludlow talking to me before I sat in on the show. He said, I have to ask you if you're a buyer of this stock. As you look at this opening of this ADR at the NASDAQ, is it something that you're interested in inherently? Well, not really, but thank you for asking. It's not because we don't like the company. We are exposed through Micron, Some of the suppliers like LAM. So we've got a pretty full allocation to the space and the segment. So I think it's interesting. I'd like to watch it. Unlike SpaceX, where we were in on day one, because it fits a theme in our thematic portfolio, we're going to sit back and just watch this one a little bit. But I loved the interview. It was a great interview. I will pass it along to Ed. In terms of the space, in terms of the sector, what do you see there? I mean, I hear so much about the bottlenecks. We heard from the chairman as well, just about the way that they're navigating the demand that they have for their products. Talk a bit about how you're seeing this play out here in the next months and years. Yeah, so I hear all the bubble concerns. I like to hear that because it's different than what we saw in the 90s, where no one was concerned about anything and they just kept buying. But I will say this. What we're hearing consistently across companies is that they have backlogs, that they have demand out three to five years, that they are locking in long-term contracts. You heard the same from SK's chairman. He basically said, you know, we're going to double memory supply in five years. And our clients are saying, our customers are saying that's not enough. That's important. And I think goes to the question of, is this a sustainable build out? And we think this is the fourth industrial revolution. We are seeing an economy in transition, and all of these technologies, not just AI, will change the way we live in the future. I want to pull up the big number that we've picked for the day. That's $350 billion, and what that represents is kind of the aggregate amount of debt obligations in the last five years for Alphabet, Amazon, Meta, Microsoft, and Oracle, of course, the five biggest spenders on new data centers in the U.S. Nancy, what's your reaction to that number? That has been some cause here for Agita or for anxiety among some investors, seeing the way in which these companies are building in this moment, in this AI era, as the chairman put it. Yeah, well, so David, I mean, when I grew up in this business, CapEx spending was good. It showed optimism from management. If you look at these companies, yes, I know they've been issuing debt, but the actual amount of debt from technology as a percent of all the common debt indices actually went down in May, probably went up a little bit in June, but it's at six and a half percent. And these companies represent 38 to 40, depending on how you count it, percent of the S&P. So I'm not concerned that they're overspending. I saw the downgrade on Oracle today. You know, they have committed to staying above investment grade. We'll see. But these companies have the free cash flow. And, you know, even with all the spending, you've got Microsoft at 32, I think, billion in free cash flow this year and 40 plus billion next year. It might be flipped. But it's important, I think, to keep this in perspective. This is not profligate spending. It's not government spending, that's for sure. Let me ask you lastly, we've got about 30 seconds left, what this moment represents for U.S. capital markets, The fact that this company has come to the U.S. to sell these ADRs, what does that say just about the importance or primacy of the U.S. capital markets today? I think you're 100 percent right, David. This is the market you want to be exposed to, especially if you're an AI company. I think the chairman said, I think he said this, it might have been Ed, that AI is understood by U.S. investors. And that is why it's important for them to be here. It also, I think, puts a toehold in, which is what Hawk Tan did many years ago, relisting AVGO here. So I think there's politics behind it, which is a good thing for the company. And there's a ready market of eager buyers. Nancy, always good to talk to you, especially as we await this opening. That's Nancy Tangler, CEO and CIO of Laugh for Tangler Investments, joining us on this Friday. Welcome back. The SK Hynix listing suggests the demand for memory remains strong, but our next guest says demand may be reaching its peak. Ivan Dilewska is the founder and chief investment officer of Spear. It's flagship ETF targets AI-related investments. Svana, great to see you. Something I'd really tried to pin the chairman down on was the notion of how long this bottleneck is likely to last. And I'm curious sort of how you see that. He kind of presented it in optimistic light. They're building. Companies are trying to do more to allay that bottleneck. Do you see it subsiding here in the months and years ahead? Well, David, we don't see demand subsiding. However, the capacity constraint is at its peak right now. So this is why you're seeing prices spike. So even if demand continues to grow here, which we believe it will, if you also have capacity additions coming at the same time, that will offset that demand growth. So we think this is the peak of the constraint that we see. and therefore if prices start peaking, you're going to see the stock starting to taper off. But we don't see a big fall off. We think demand will continue. So that's really the fundamental case for memory. Where are we in this evolution, this growth story of AI? So we talk about the AI era, this kind of broad umbrella. You draw a distinction between kind of the model stage of where things are and this move toward more agentic world. Are we there yet? When do we reach it? And how does that color or change the way that we look at memory? So, David, really the model training era needed a specific type of memory, which is called high bandwidth memory. That's a small subsegment of the broader memory trade. And that's really what grew during the model training era. As we enter the agentic era, we are seeing a lot broader demand for memory. So, AI agents act in a very similar way to humans. So, they need to keep context. They need to keep working memory, which is why you're seeing DRAM prices skyrocket. So the more traditional parts of memory are required for agentic AI, and that's what's lifting basically the entire memory trade here, not necessarily just HBM. Are investors looking at that with enough nuance? I think there's been a clamor and eagerness to get into this space, the infrastructure surrounding AI. Are they thinking through it well enough sort of where all of this is headed and what infrastructure is needed? Well, David, I think that's really key for investors to do here to understand the entire value chain. We're basically making this big push into investments into adding memory capacity. So rather than investing in the chip suppliers, a better risk reward would be to invest across the value chain and the companies that provide the semi-cap equipment. So basically, I think the idea from here is that there is one kind of investment wave where whatever you buy will do well. and then the next trade is to actually understand the different parts of the value chain and pick your spots. I want to ask you, as somebody who has ETFs and lives in this world, there has been such enthusiasm for getting into this sector through the South Korean market. How does this, having these ADRs, change the way that we approach companies that are not domiciled, not based in the U.S., but have this presence in this global marketplace outside of the U.S.? Well, David, I think it's very important for U.S. investors to have exposure to some of these larger, high-quality companies that are global. So I think that's a very positive thing that an ADR is getting listed. I think the reporting standards in the U.S. are also significantly better than elsewhere. So that provides an extra layer of security for U.S. investors. So I think that's a pretty positive trend here that investors can get access to SK Hynix, which is one of the highest quality names within the three memory suppliers. Micron and Samsung, the other. Let me ask you finally just about the AI bubble. Ed brought it up with the chairman during their conversation, and he said there's this kind of disconnect between the real world and the stock market. He said there's still demand in the real world. How are you thinking about the prospect of this being perhaps more effervescent, perhaps more of a bubble than investors would like? Well, I think people are really misunderstanding this bubble concept. What we are really seeing more from our end is different investment waves. So we're really seeing there was one cycle where we had a lot of GPU investments, a lot of big data centers. Now we're entering another cycle where Agentee KI needs a lot more CPUs. They need a lot more networking to connect to each other. So we're really seeing a lot of different investment waves. On a day-to-day basis, they trade all in sync. But if you look on a one to three-year basis, you're going to see big divergence between the mega-cubs versus some of component suppliers that provide some of the more interesting ways to play the trade. Ivana, thank you very much. That's Ivana Levska joining us here on set in New York, CIO at Spear. As we continue to talk about the interview that my colleague Ed Ludlow just did with the chairman of the SK Group, that's Che Taewon, down at the NASDAQ as we await the opening trade of those ADRs which are being listed on the NASDAQ today. And again, the chairman talking about the notion of there being a lot of conversation about a bubble here when it comes to AI in particular, drawing that distinction between the real world and the stock market and saying, at least from where he sits, AI has spiked a lot of demand for SK Hynix. And what he sees is the most important thing to do here in the months ahead is to lower token costs. And he does, in fact, see those costs coming down. That actually requires a better return. So once we have a better return, then there is more demand. So first thing is that we have to keep the stock price stable. And, well, hopefully in the long run that we can have that upside potential. First things first, keep the stock price stable. Welcome back to Bloomberg Tech. I'm David Guray, in for Ed Ledlow. He is at the NASDAQ this morning. I was SK Group Chairman Che Taewon in our interview less than an hour ago. This is SK Hynix's U.S. listing is happening today. The biggest ever U listing by a foreign company I want to get the latest on markets the Bloomberg Yahira Anand Yahira Hi David Well as we look at the broader market we can now see that the Nasdaq has flipped It is now positive up about one of one percent while the Philadelphia Semiconductor Index has trimmed its losses now, down just one-tenth of one percent. That said, this remains one of the most volatile corners of the market. Jonathan Krinsky over at BTIG had this amazing stat that the stocks has swung up three percent or down 3%, 15 times over the last trading sessions. We haven't seen that since the year 2000. And now let's take a look at some of the biggest names in the chip trade and how they are performing. Micron, Intel, NVIDIA will flip the board, but they were lower earlier. They are still falling. Micron down about 1%. NVIDIA and Western Digital bucking the trend. NVIDIA up 2.8% as we await to absorb all this new supply from SK Hynix. Still waiting, Yahaira. Thank you very much. Appreciate that update on the markets and those chip stocks. We want to go back to the NASDAQ where Bloomberg's Ed Ludlow is standing by. Ed Breverow, interview there that you just did. Your sense of where things stand here and your main takeaways from that interview that just took place. Well, I think we're very close to the start of trade. And the latest indicating opening for the ADR is $170. They priced it at $149. So it's about a 14% premium. There was demand there, right? What was really interesting in the interview, and you guys played that soundbite, there's already questions in the market about how SK uses the ADRs on a sort of more regular and ongoing basis to raise capital. So like the record, as you put it, they raised $26.5 billion. It is a record for a first time US share sale by a foreign company. But if you look at where SK Hynix is committed in terms of the capital commitments to expand capacity, the various projects it has and SK Group more broadly across the AI stack. $26.5 billion doesn't seem like that big a number. We're just looking right now for the start of trade to happen any minute. As I said, the indication $170 per ADR, the pricing at $149. I think what Chairman Che said very clearly, right, was that they want to see price stability. They want to take a longer term view before they decide the when and how much of tapping ADRs. We also got into the idea more broadly in capital markets of bond issuance, which is like well at the heart of the history of the memory game back in the 2012 at the time that SK acquired Hynix. It's a different world now. Less cyclical. It's still cyclical. There's a lot to unpack. We'll get to that later. All right, Ed. Thank you very much. Ed Ludlow down at the NASDAQ. He has another interview coming up here. Do stay with us. And I want to get back now to Bailey Lipschulz, Bloomberg Tech equity reporter, and pick up on what Ed was just saying a moment ago. That is the chairman's emphasis on getting price stability, stability of these ADRs. And maybe you can give us some insight into the challenges of that going forward. And of course, the point of reference for so many of our viewers is the SpaceX IPO of just a few weeks back. And we saw Newtonian physics and stark relief there. What goes up must come down, I suppose. What lessons can we take away from, yes, that listing and how much of a challenge is it for this company, for a company to manage a listing like this one? Well, David, the difference is SpaceX was selling shares for the first time. There was no reference price. There was nothing really other than betting on Elon and kind of putting that idea together. SK Hynix does still trade in South Korea. So there at least is some floor and some real sense of valuation. And this is a company that's been public for quite some time, as Ed had mentioned. The big question to your point, though, we saw SpaceX open and trade much higher in the first two days and still trading around where it initially opened at. That's not great volatility, but not a terrible outcome. You look at Sarah Bross, a chip maker that went public a number of weeks ago. similar. Tremendous opening first day, breaks issue price a number of weeks later after earnings. There's a lot of volatility in the chip making space. So if you're SK Hynix and if you're an investor who took a position today, the big expectation is you want it to maintain a premium relative to the South Korean shares. Again, similar to Taiwan Semi, you don't really want to see this gut-wrenching volatility to the up and downside. We are awaiting, of course, the start of trade for SK Hynix's ADR on the Nasdaq. You can see there on the left of your screen, group gathered there of executives and others at the NASDAQ here in New York City awaiting the start of trade. It was priced at $149 per receipt. We have seen some vacillation in terms of what the expectation is for the open of those shares here as the morning has gone on. The latest indication, I believe, is $171. But as we were just talking about with Bailey Lipschel, these things tend to fluctuate. There's a lot of volatility between when a listing is priced and what happens indeed when they do start trading. Bailey, walk us through here as we see the applause. There may an indication of the start of trade here. In fact, I think that it is. We see SK Hynix opening at $170. Again, the IPO price, $149. Cheering, flags waving, an indication there on your screen of the current price, $172.49. Moving upward again from that opening price of $149. I should say the price that was targeted there by the company, $149. Bailey, walk us through what happens next here. This is a process of digestion that takes place here over the next few hours, isn't it? It is. And David, back to your point on stability. Again, if you use an apple to apples comparison, that 18 percent premium that we see for Taiwan Semi equates to about $171 for SK Hynix. So opening essentially in line with that premium, the big question to your point is, do we maintain kind of a floor? If you're a banker or if you're a market maker on this, you want it to stay in that 170 to 173 range, maybe a little bit below. But the big kind of mark of death, if you will, that we've seen with a number of these deals is initial rush of buy orders, retail pouncing because they make a lot of market orders. You see a stock start to shoot higher. Maybe there's a volatility halt and then you just see a lot of chop. That's one thing that these underwriters and that these market makers are going to try to avoid. Again, it's a completely different beast, though, because it is a more than one trillion dollar market cap company. It does publicly trade in South Korea. So it's a bit of a different beast. But all things considered, just looking at the first few opening trades, what I'm seeing, I think most bankers and everyone on this deal would say, as of now, is a roaring success. Once again, the largest ever U.S. listing by a foreign company. Looking at SK Hynix now trading on the NASDAQ, the price $149, seeing it trading around $170. So opening about 14% higher than what was expected by the company. Again, a $26.5 billion ADR here on the NASDAQ. Bailey, before I let you go, you heard the comments from the chairman there just about the prospects for further expansion. their interest in maybe growing the size of this ADR, tapping the debt markets. Of what acute interest is that to investors at this point? Again, as they're processing all of this, as they're trying to put a price on this company relative to what they've seen in Seoul, how much are they thinking about the prospects of, again, another ADR or a larger ADR going forward? It's certainly top of mind. Again, this is a different beast. So you have really one-way fungibility. So you can take those South Korea shares and convert them into ADR. So that can expand the available shares for trading. That's different than what you would see with the SpaceX, where people are circling earnings and any kind of expectation around a lockup rush for investors to sell stock. The big question, though, to the chairman's point, if we look further out, if we look a year out when it's most likely in the NASDAQ 100, does that create more systematic demand that allows them to tap investors, raise capital, kind of bolster their balance sheet, but also further expand the float? Because right now, again, we are looking at a pretty tight float just because it is an IPO. So about 2.5% call it of the total shares available for trading. That can lead to volatility. You want to get that to a bigger piece of the pie. The last question, I said that was the last one, this one truly. If I'm sitting in Boise at Micron's headquarters, if I'm in Seoul at Samsung's headquarters, how am I processing what's happening here? What does this mean for the broader memory-making ecosystem, the broader global memory-making ecosystem? I think for Micron, it's game on. You've been trading at a premium to SK Hynix. This is their ability to narrow that premium. If you're sitting in Samsung's offices, I imagine you're thinking about what this could look like for you. We know Kioxia, the Japanese company, is planning on listing in ADRs sometime in the first half of next year. Is this the start of a trend, especially if we aren't in an AI bubble and this demand seemingly can be no longer cyclical but more fundamental? I think that's the question that those different teams are asking themselves. No doubt you heard what I did at asking the chairman of SK Group if he thought they could catch up to Samsung. and he demurring there a little bit, saying that's not the priority right now. How much of that was bluster, do you think? How much do you think that kind of binary competition between these two South Korean giants is really front of mind here? Yes, to the chairman of SK Group, but the company as a whole. Everyone wants to win, David, right? You've been covering markets long enough to know that you want to beat your rivals. I think, again, this is a moment in time that they now have the branding. They are now traded on the NASDAQ. They now are kind of opening up their company formally to U.S. investors, to U.S. retail investors. That's a big win. It goes back to the debate anthropic versus open AI and what that means. I think that's a big step forward. And whether or not people obviously know who SK Hynix is, this is a big step towards that name recognition which Mandeep Singh had been making a few segments ago. Yes, indeed. Many will know more about it today. and we see SK Hynix again priced at $149, now trading at close to $175, so up 17% from that initial price. And Bailey, I was struck by the way that the chairman talked about the stakeholders to whom he's responsible. And you've listened to many chief executives, chairman talk about this issue, but he says he has so many stakeholders. There are customers, there are shareholders, there are employees. Of course, the ADR is another one. Perhaps you could talk a bit about striking the balance after a moment like this one. Again, not a traditional IPO by an American company, a company domiciled here. But the way in which this opens the door to, I guess, having to prioritize one, perhaps more of those stakeholders more than in the past. Well, David, I think the thing that's interesting when we look at this entire ecosystem, you think about the, to your point and to the chairman's point, customers matter. You want to maintain a terrific relationship. We've had a lot of conversations over the last year, last year and a half about this notion of circular financing. Obviously, that steps away from what SK Hynix is doing, but it's all part of a balance. As much as we've seen a rampant jump in demand for memory chips leading to jump in profits, leading to soaring stock prices, you still need to keep a balance with customers. This is an ecosystem that really does win when everyone is performing better and firing on all cylinders. The big question comes back to, is this going to play out like so many cycles of the past where there's a bottleneck now that gets addressed ultimately, and then someone's left holding the bag? The ticker SKYV, excuse me, for the time being. That's slated to change here in the days ahead. SK Hynix now trading at the NASDAQ. $172 a share, again, priced at $149. I'm grateful to Bailey Lipscholz, my colleague here at Bloomberg News, for joining us as we saw the beginning of trade here in New York. Coming up, we're going to go back to the NASDAQ. Ed Ludlow is going to sit down with NASDAQ's president, Nelson Griggs. That's coming up on Bloomberg Tech. Welcome back. We want to go back to the NASDAQ now where Bloomberg's Ed Ludlow is with the president of that exchange, Nelson Griggs. Ed, over to you. Yeah, Nelson Griggs is NASDAQ president. And that went about as well as it possibly could have done right Yes it did Talk about the experience of it You a record in terms of your first time US share sale for a foreign entity We keep saying that, but the mechanics of it, a feat, difficult to pull off? Well, I think a lot of the mechanics will be the underwriters. So let's give them all the credit in the world. JP Morgan running this transaction primarily as a stabilization agent. Not always stabilizing this trade, but they were the orchestrator, let's call it that. Our job is to provide the capacity, the technology. You saw behind you the human intelligence and making sure that everyone knows what's happening with full transparency. So all the book runners can communicate with their customers, which is the buy side, the investors who are making the bet on S.D. Hype. Celebration is continuing behind us. It's going to continue for a while, I think. No, it's good. It's interesting. This isn't very sophisticated, but it's a Friday. Does that play into it at all? What are we seeing in the activity around that? I think most deals will price and trade on a Wednesday or a Thursday. Friday is not typical, especially during the summer. But I think you get to a deal of this size that has captivated the market. It had tremendous institutional interest. So I think it could have, you know, any day of the week would have been fine for SK Hynix. Nelson, one of the things I started the conversation with Chairman Che on was the idea that on an ongoing basis, ADRs are an interesting mechanism for them in the capital markets. And essentially what Chairman Chase said was, well, we'll look at some stability and give it some time. But yes, how would that work, the idea that you come back to the market on whatever cadence they choose? Sure. Well, companies typically will come back to the market. They'll be evaluating where they get the best valuation for those shares, whether it's in their local market or an ADR market. But the typical technology IPO will come back to the market several times to raise capital. This is a very seasoned public company. So they'll go through all those mechanics and say, where is the best place that you need to raise capital? It could be the debt markets. It could be the equity markets. And hopefully it's ADRs in the U.S. Do we need to make anything of where they price the ADR? You know, this morning on the Bloomberg, it was about this idea, OK, this is a 3% premium over where the common shares in Seoul closed. The ADRs represent a tenth of one common share. You know, the back story is how much money do you or do you not leave on the table? That's always the question, right, for companies. And typically, if an IPO, let's say it's not an ADR, will benchmark off their current public comps. This is a combination. Okay, so what is the equity trading in Korea? Also, you have a large U.S. comp in Micron. So how do you find that balance? And that's where, again, I think J.P. Morgan did a very nice job here getting the price to a point where we've seen some nice upward price action. It's very stable at the moment. And I think they did just a great job. Chemin Che made an interesting point about maybe the rationale or so for doing this, which was not just the capital, the proceeds raised, but introducing SK to the American people, essentially. That was in the context of the talent perspective, right? A pipeline of talented people that might work for the company. From the NASDAQ side and your involvement through the process, how much do you take that into account? Quite a bit. And most companies will take that into account. So you look at being on a public stage, the global capital markets public is about $150 trillion in market cap. The U.S. is 70% of that. I think being a public company in the U.S. does show as you want to attract talent. They're making significant investments in the U.S. Having a U.S. currency to do that is a big deal. And even a traditional IPO puts the brand component as one of the major reasons why they think about tapping the public markets. There is another big memory name and chip name in South Korea. It's called Samsung. How much have you been talking to them about doing something similar? We never talk about, you know, names on camera or in public until it becomes a point where it is public. But I think if you look at having moments where you have a successful offering, it does open up the eyes of others to say, does this make sense for us? So at the very least, companies who have an internationalist will say, how does this correlate to us? Do we have an investor pool to tap into? Do we want to think about the brand aspects? And then understanding, do they want to do another offering? Is there more broadly a pipeline, do you think, of technology companies outside of the United States that are looking at this and thinking this is getting that fair valuation? Yeah. Yeah. So I was actually just in Europe this week and meeting with a lot of companies. And if you look at this year of the top 10 raises, four have been international. Now, three of them, this is one of them with SK Honix, but you had Vending Spoons go public, PayPay, Ineo, very large deals that felt the U.S. capital markets gave them the best valuation. I think we're having more of those conversations than ADR-type listings, but both have a lot of momentum behind them. Is there a different speeds in those markets, Asian technology versus European technology that you're seeing? No, I wouldn't say that. I think most of the European ones are more the startup companies that have not listed anywhere yet. So they really look at the U.S. as a primary first listing, maybe the only listing. I think we do look at a lot of companies in Asia might have a local listing, and they think about ADRs. I've got one very quick niche question for you the team sent over, which is how is NASDAQ thinking about the prospect of more leveraged single-name products, ETFs? It's something that comes up a lot and has this week. Leveraged products under... Under a single name ETF for tech companies in particular. Yeah, we look at where the market demand is for things like that. There's market demand, and it's a product that we think is going to be appropriate for the market, regulated. You know, NASDAQ is a participant in innovation. We look at how we address market needs. Nelson Griggs, NASDAQ president. Wonderful to be here. On an exciting and important day here at the NASDAQ. David, back to you. Ed, appreciate that. Ed Lettle again there with President Nelson Griggs of the NASDAQ. And we have more on the technology fueling the chip frenzy of today. Joining us now is Subramani Nair, Distinguished Professor of Engineering at UCLA. founding director of the Center for Heterogeneous Integration and Performance Scaling. Yes, put that together. It spells chips if you do the first letters of each of those words. He's a former IBM fellow. Professor, great to have you with us, and I want to go back to this interview. And there was a moment during the conversation in which the chairman of SK Group talked about the prospect of there being memory as a service. I'm curious sort of how nascent that is, what it means exactly, and how much that represents kind of the future, the prospects of memory going forward. That's fantastic. That's actually a very good lead-in to this discussion. So why is memory so important today, right? I mean, it has always been very important. And to a large extent, high-performance computing, whether it be classical high-performance computing or artificial intelligence-focused computing, has always been memory-limited. However, how you use that memory is changing, right? And if you look at the latest product that comes out of most of the memory companies, including SK Hynix, including Samsung, and it is the integration of logic with memory and trying to actually produce more intelligent memory chips. Now, how you do this actually depends very much on the architecture of your system. And it involves integrating sort of a very high-performance logic chip along with the memory. So the memory is no longer just a sort of a dumb piece of bits, a bunch of bits, but something that is a little bit more intelligent. Okay, and I believe that is what people are looking to do with memory. So go away from the sort of commodity model of memory and say, hey, look, maybe the way to do this is to configure the memory ourselves and allow the user to use that configuration as they wish. We have too short a time, but I do want to ask you sort of to situate this company in that pantheon of Samsung, Micron, yes, SK, Hynix. When you look at the work that it's doing and what it's pioneering, where does it stand relative to those other two companies? Actually, currently, I would say that SK Hynix is in a very, very dominant position. They actually command the largest fraction of what is called the HBM market, the high bandwidth memory market, which is really what's fueling all this growth. And they have actually struck some good sort of collaborations or supplier relations with the major sort of logic company, TSMC. They have excellent technology. And I think all that is coming together very nicely. And, you know, they're very well poised to actually benefit from this boom in AI. A point that they made, the chairman made, is that they're very singularly focused on memory. and maybe that stands to benefit them going forward. I wonder if you agree with that, that they have a very unified sense of what they're doing. Yes, they are focused on memory. They don't have a logic technology. Samsung does have a logic base as well. And they're sort of focused on collaborating or using TSMC technology. That actually is a double-edged sword, in my opinion. But for the moment, it's a good strategy, okay? Whether it is the right strategy long term, I don't know. Professor, thank you very much. That's Super Mandy and I here joining us from Los Angeles. He's a distinguished professor of engineering at UCLA. We'll have him back on. We'll talk about assembly and packaging and interposers as well, all of which are his specialties. In the meantime, let's get back to Bloomberg's Yahira Anand, who is here to talk a bit more about the opening of trade for SK Hynix on the NASDAQ. Hi, David. Well, it is off to a strong start, up about 16% from its offering price of $149. And the strong debut validates what the order book had been signaling, that this deal was more than seven times oversubscribed with total demand of nearly $200 billion. And SK did not even need to sweeten the deal, pricing its ADRs at a premium to its South Korean shares. and investors are showing that they're willing to pay up for direct U.S. exposure. And I will also say what this means for the broader market, that this, at least for now, quiets concerns of investors pulling back from the AI trade since we have seen quite volatile sessions for the chip sector as of late. It's an incredible surge from that price of $149, Yahaira. Thank you very much for that update here on this Friday afternoon. Again, as we can pick apart the comments from the chairman of the SK group that took place with Ed Ludlow at the NASDAQ, saying this is a dream come true for him. Ed pointing out early on, this has been in the works for a very long time, finally coming to fruition here in New York. We see it trading at 170, a receipt now up 14% from that initial price. And as mentioned just a moment ago, certainly a relief to the NASDAQ, to this company as well, just to see that performance out of the gate. But as we talked about over the course of the last hour with Bailey Lipschulz, Mandeep Singh, there's often volatility on the heels of this. And we'll continue to monitor that throughout the day here on Bloomberg Television. That does it for this edition of Bloomberg Tech. Don't forget to check out our podcast. You can find it on the terminal as well as online on Apple, on Spotify and iHeart. This is Bloomberg.