Good morning, happy Friday and welcome to FirstFT. In today’s newsletter:
We begin with SK Hynix, the trillion-dollar Korean chipmaker making its US market debut today.
What to know: SK Hynix has raised $26.5bn in its Nasdaq debut, marking the largest-ever US listing by a foreign company as AI drives rocketing demand for the South Korean group’s memory chips.
The company’s American depositary shares priced at $149 per ADS, a slight premium to SK Hynix’s closing share price in Seoul on Thursday. The offering was seven times oversubscribed, with more than 500 investment firms vying for shares, according to two people familiar with the matter.
Earlier in the week investment firms Situational Awareness — led by former OpenAI researcher Leopold Aschenbrenner — as well as Baillie Gifford and Coatue indicated they could take as much as $7bn of the offering. One of the people familiar with the deal said the firms’ final allocation was reduced because of the high demand.
Wall Street set for bumper payday: Bank of America, JPMorgan, Citi and Goldman Sachs are the lead underwriters on SK Hynix’s deal, and could rake in fees of more than $140mn.
What’s at stake? The Nasdaq initial public offering for the South Korean group comes as the building of AI data centres drives rocketing demand for memory chips, which has helped propel SK Hynix into the elite club of publicly listed companies with a market cap above $1tn.
A payout of $140mn would make the Nasdaq listing one of the largest money spinners for Wall Street from an Asian company, alongside Alibaba’s $25bn IPO in 2014, which had a fee pool of $300mn, according to figures compiled by Dealogic.
The listing comes as SK Hynix expands its manufacturing capacity to keep pace with AI-driven demand. The company is building new chip fabrication plants in Korea and purchasing extreme-ultraviolet lithography scanners from the Netherlands’ ASML.
Here’s what else I’m keeping tabs on today and over the weekend:
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Oil market: The International Energy Agency releases its latest Oil Market Report today.
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Sport: The Wimbledon tennis women’s singles final takes place on Saturday — an all-Czech match-up between Karolina Muchova and Linda Noskova — while the men’s final is on Sunday. Meanwhile the Fifa World Cup quarter-finals continue today and Saturday.
Five more top stories
1. Iran said the US had targeted railway bridges on the route to the holy city of Mashhad, where the late supreme leader was due to be buried, in the first attacks on Iranian infrastructure in months as tensions escalated between the foes. Here are more details.
2. A dispute over the meat used to make Peking duck could ignite a trade war between the EU and China after Brussels on Thursday opened an investigation into dumping of Chinese duck meat at below-market prices. Tensions between the two sides are already high after the European Commission complained that the EU’s growing trade deficit with China, running at €1bn a day, was “unsustainable”.
3. A record European heatwave forced some Uniqlo stores to close temporarily last month, the Japanese fashion group has said, damping an expected sales bump from summer clothing. Fast Retailing, owner of the Uniqlo brand, has become one of the biggest retailers to lay bare the extent to which searing temperatures hit shopping in Europe.
4. Chinese manufacturers that use rare earths are seizing a “historic” opportunity to move up the industrial value chain and squeeze their foreign rivals. China curbed exports of critical minerals to dozens of Japanese companies this year after Prime Minister Sanae Takaichi made remarks about Tokyo’s role in a hypothetical conflict over Taiwan, expanding restrictions that were already in place.
5. Kevin Warsh has unveiled a host of leading names from business and academia to lead his efforts to revamp the Federal Reserve. Those named to head five new task forces include former Bank of England governor Mervyn King; ex-Reserve Bank of India governor Raghuram Rajan; Marc Andreessen, co-founder and general partner of Andreessen Horowitz; and Nobel laureate Thomas Sargent.
The century-old device choking the world’s AI push
Transformers are fundamental to the flow of electricity — underpinning every aspect of modern life. About 90 per cent of all electricity passes through one on its path from generation to consumption. But the most powerful transformers are facing bottlenecks, driving up prices and jeopardising the relentless race for AI expansion.
We’re also reading . . .
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Ghosts of 1997: South Korea’s ambition to be recognised as a developed market is being held back by scars of the Asian currency implosion.
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Prediction market compliance risks: Goldman Sachs has warned employees to limit their betting on prediction markets to sports and entertainment categories.
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Investing: Private assets could work for retail investors but fees are a problem, argues Robert Armstrong.
Chart of the day
New York’s boutique investment banks insisted new rainmakers’ multimillion-dollar guaranteed payouts were a temporary phenomenon, write Joshia Franklin and Sujeet Indap.
But rather than the expensive post-pandemic hiring spree being a one-off event, the boutiques have continued to add expensive new recruits as mid-market dealmaking has struggled and they have pushed into faster-growing areas such as private credit, AI, power and energy, tech and sports. Boutiques are now warning investors that they are in for a long wait until these costs fall.
Take a break from the news . . .
Four centuries after the sinking of the Vasa, an impressive ship built for the Swedish navy, there are important lessons to learn for Washington DC to Downing Street and Silicon Valley, writes Tim Harford.
