(July 14): Samsung Electronics Co is in the early stages of exploring a potential offering of American depositary receipts, according to people familiar with the matter.
The company has held preliminary discussions with banks, but hasn’t yet made a decision about whether to proceed, the people said, asking not to be identified discussing private deliberations. Samsung will monitor the volatile memory chip stocks as part of the decision making, they said. If the company moves ahead with a US listing, its sprawling business portfolio and recurring labour disputes could pose challenges in structuring the deal, according to the people.
The discussions are in the very early stages and may not result in a listing, they added. A representative for Samsung declined to comment.
The company has in the past reviewed the possibility of an ADR offering before ultimately deciding against proceeding, though the successful US listing of SK Hynix Inc has given Samsung fresh motivation to revisit the idea, according to the people. Still, the discussions are in the very early stages and remain more of a review rather than specific plans or mandating a bank for the sale, they said.
SK Hynix, which competes with Samsung in the memory chip market, raised US$26.5 billion ($34.3 billion) last week in the biggest-ever US listing by a foreign company. The deal was an indication of investor demand for the companies that sit at the fulcrum of the global artificial intelligence buildout, powering through concerns that valuations along the AI supply chain are overstretched.
Samsung shares have gained about 120% this year to raise the company’s market value to over US$1 trillion. That compares with a 194% surge for SK Hynix, which has a capitalisation of about US$900 billion.
The stock’s rally has priced in lofty expectations for earnings growth. Last week, Samsung’s preliminary results appeared to top estimates, yet the shares fell sharply, underscoring how difficult it has become to satisfy investors.
Also weighing on chip stocks is the prospect of additional capacity coming online, easing memory supply constraints and pressuring prices and margins.
Last month, Samsung Group and SK Group said they plan to build two chipmaking plants apiece for a total of 800 trillion won (US$536 billion), to rapidly expand production capacity to meet increasing demand. South Korea also announced 550 trillion won of investment from companies including internet leader Naver Corp to build 8.4 gigawatts of AI data-centre capacity by 2029.
Uploaded by Magessan Varatharaja
