South Korean semiconductor maker SK hynix raised $1.7 billion in its first convertible bond sale in a decade as the world’s second-biggest maker of memory chips braces for higher quarterly losses as global demand for chips slumps. However, the company does not intend to give up.
Image source: SK hynix
This is the first such deal for the company since it was bought by SK Group in 2012. According to the manufacturer, the funds will be spent on purchasing materials for making chips and other operations of a similar nature. According to experts, receiving the funds will dispel doubts about a short-term liquidity crisis.
Fundraising had to be resorted to after SK hynix reported a record $1.4 billion in operating loss in the most recent quarter of its most recent calendar year. According to experts, new losses are expected in the first quarter of the 2023 calendar year, and the memory chip industry will only gradually begin to recover in the second half of the year.
Bank of America became the sole bookrunner for the transaction. The deal was the largest sale of convertible bonds in the Asia-Pacific ex-Japan region in a year. It is known that the company initially planned to raise $1.5 billion, but later increased the offer to $1.7 billion due to high demand from buyers. According to some reports, demand for bonds was four times higher than sales volume, and investor appetites have not been affected by recent volatility in global financial markets.
Park Jung-ho, vice chairman of SK hynix, said in a recent speech at the company’s headquarters that the manufacturer does not intend to further reduce production as the market situation is expected to improve in the second half of the year. As previously reported, the company also intends to build a chip packaging plant in the United States.
In 2022, due to falling demand, SK hynix said it would cut its investments by 50% year-on-year in 2023 and reduce less profitable products. However, when asked about possible additional production cuts, Park Jung Ho replied verbatim: “We will not.” During communication with shareholders, he expressed hope that the situation will improve in the second half of 2023, which will be indicated by the development of Technologies like ChatGPT that require a lot of memory is facilitated.
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