SK hynix ADRs hit record high amid memory chip shortage expectations

SK hynix American Depositary Receipts (ADRs) reached a record high on the Nasdaq, closing at $198.63, a 33% increase from its offering price of $149. The surge is driven by expectations of a prolonged memory chip shortage, with analysts predicting supply deficits in DRAM and NAND flash through 2027.

Despite the ADR rally, SK hynix's domestic shares in South Korea have faced downward pressure. This divergence is partly attributed to technical factors, including selling pressure from the Korea Exchange (KRX) semiconductor index rebalancing, which requires reducing the stock's weight to meet a 20% cap.

There is also a significant price gap between the ADRs and the domestic underlying shares. On a recent trading day, the ADR was priced approximately 36.1% higher than the domestic stock when adjusted for exchange rates. While the conversion window between ADRs and domestic shares is open, supply constraints—such as issuance limits and regulatory reporting requirements—prevent immediate arbitrage or rapid supply increases in the US market.