SK Hynix raised $26.5 billion (approximately 40 trillion won) through an American Depositary Receipt (ADR) issuance on the Nasdaq on May 10 (local time), with payment settlement scheduled for May 14. The South Korean semiconductor manufacturer plans to allocate the funds primarily to domestic investments, including the Yongin semiconductor cluster, Cheongju P&T7 advanced packaging facility expansion, and extreme ultraviolet (EUV) lithography equipment procurement, according to its securities filing. The large-scale dollar inflow is drawing attention as a potential stabilizing force for the won-dollar exchange rate, which had climbed near 1,560 won earlier this month amid global dollar strength and domestic capital outflows. Financial market analysts compare the fundraising scale to crisis-era liquidity measures: the $26.5 billion exceeds the $19.872 billion in dollars actually supplied during the 2020 pandemic under the Federal Reserve-Bank of Korea currency swap arrangement. The anticipated conversion of dollars to won for domestic expenditures is expected to ease dollar supply shortages in Korea's foreign exchange market.
SK Hynix Allocates $26.5B ADR Proceeds to Domestic Semiconductor Investments
SK Hynix disclosed in its securities filing that the $26.5 billion raised through the ADR offering will fund the construction of the Yongin semiconductor cluster, expansion of the Cheongju P&T7 advanced packaging facility, and procurement of EUV lithography equipment. The company requires won-denominated currency to pay domestic construction contractors, suppliers, and employee wages, necessitating conversion of the dollar proceeds into Korean won. Payment for the ADR issuance is scheduled to be finalized on May 14. SK Group Chairman Chey Tae-won and key executives, including SK Hynix CEO Kwak Noh-jung and SK Square Vice Chairman Chey Jae-won, attended a ceremony at the Nasdaq Tower in Times Square, New York, on May 11.
Fundraising Scale Exceeds 2020 Crisis Liquidity and Matches Monthly Trade Surplus
The $26.5 billion ADR fundraising significantly exceeds the $19.872 billion in dollars that were actually supplied to Korea's financial system during the 2020 COVID-19 crisis under the $60 billion currency swap arrangement between the Bank of Korea and the U.S. Federal Reserve. The amount represents 73% of Korea's total trade surplus in June (approximately $36.2 billion) and is comparable to the first-quarter daily average spot foreign exchange trading volume of $33.28 billion reported by the Bank of Korea. It also equals double the approximately $13.6 billion in net dollar sales conducted by foreign exchange authorities during the first quarter for exchange rate defense, according to industry and financial sector sources.
Won-Dollar Rate Drops Over 50 Won from Peak Following ADR Announcement
The won-dollar exchange rate peaked near 1,560 won during intraday trading early this month—the highest level since the global financial crisis—driven by yen weakness and foreign investor selling. The rate subsequently dropped more than 30 won in a single day on May 3, fell below the 1,500 won threshold on May 8 on a closing basis, and closed at 1,501.4 won on May 10. Foreign exchange market specialists attribute the rapid decline of over 50 won from the peak partly to market anticipation of the SK Hynix ADR proceeds inflow. The expected large-scale dollar selling and won buying has exerted downward pressure on the exchange rate even before actual conversion occurs, with companies placing forward exchange contracts to hedge currency risk and banks selling dollars in the spot market in response.
Partial Dollar Conversion Expected from Mid-July Through September
Not all $26.5 billion is expected to be converted into won in Korea's foreign exchange market. Payments for overseas purchases—including high-value equipment such as EUV lithography systems from Netherlands-based ASML, raw materials, and foreign-currency debt repayment—are likely to be settled directly in dollars. To minimize market disruption, SK Hynix is expected to convert the funds in stages aligned with its investment schedule rather than in a single transaction. Financial sector sources anticipate that conversion activity will begin in earnest after the May 14 payment settlement and continue over several months from mid-July through August and September. This phased approach is expected to function as a long-term defense mechanism that caps the upper range of the exchange rate and limits sharp appreciation, rather than causing an immediate drop.
FAQ
What did SK Hynix raise through its Nasdaq ADR issuance on May 10?
SK Hynix raised $26.5 billion (approximately 40 trillion won) through an American Depositary Receipt (ADR) offering on the Nasdaq on May 10 (local time), with payment settlement scheduled for May 14. The company disclosed in its securities filing that the proceeds will fund domestic investments including the Yongin semiconductor cluster, Cheongju P&T7 advanced packaging facility expansion, and EUV lithography equipment procurement.
How does the SK Hynix fundraising compare to the 2020 currency swap arrangement?
The $26.5 billion ADR fundraising exceeds the $19.872 billion in dollars that were actually supplied to Korea during the 2020 COVID-19 crisis under the $60 billion Federal Reserve-Bank of Korea currency swap arrangement. It also represents 73% of Korea's June trade surplus (approximately $36.2 billion), matches the first-quarter daily average spot FX trading volume ($33.28 billion), and equals double the approximately $13.6 billion in net dollar sales by foreign exchange authorities during the first quarter.
Why did the won-dollar exchange rate drop over 50 won from its peak?
The won-dollar rate peaked near 1,560 won during intraday trading early this month, then dropped more than 30 won in a single day on May 3, fell below 1,500 won on May 8, and closed at 1,501.4 won on May 10. Foreign exchange market specialists attribute the decline partly to market anticipation of the SK Hynix ADR proceeds inflow, which created downward pressure through expected large-scale dollar selling and won buying even before actual conversion occurred.
