SK Hynix in the US: ADR vs. Ordinary Shares, Why Does the Same Company Have Two Types of Stock?

In the past couple of days, SK Hynix is about to list on NASDAQ, with the ticker SKHY. According to the publicly filed plan, the listing is scheduled for July 10th, with a fundraising size close to $29.4 billion. Once this figure materializes, it will surpass Alibaba's record of approximately $21.8 billion set in New York in 2014, becoming the largest ADR issuance on record.

But there's a point worth mentioning here—the SKHY you buy in your US stock account is not the same security as the Hynix (ticker 000660) held by a Korean retail investor on the Seoul Exchange. One company, two markets, two prices, even two different fates.

This is where ADRs are most easily confused.

A "Warehouse Receipt"

First, let's talk about what an ADR is. The full name is American Depositary Receipt. The name sounds intimidating, but in simple terms, it's just a certificate.

How does it come about? Roughly three steps. First, a US depositary bank goes to Korea, buys the actual Hynix shares, and locks them in a local custody account. Second, the bank issues corresponding certificates in the US at a fixed ratio. Third, the certificates are listed on NASDAQ, traded in US dollars. When you click "buy" in your US stock account, that's what you're buying.

To use an analogy: you store a case of wine in a liquor store's warehouse, and the shopkeeper gives you a warehouse receipt. This receipt can be freely traded at the store's entrance; whoever holds it has the rights to that case of wine. The ADR is this warehouse receipt, while the underlying stock is the case of wine in the warehouse. You are trading the receipt the whole time; the wine remains untouched in Seoul.

Why go through the extra step?

The question arises: Hynix is already listed in Korea, couldn't Americans just buy the Korean stock directly? Why take this detour?

For a US investor, the hassle of directly buying Korean stocks is greater than imagined. You need to obtain trading permissions for the Korean market, exchange currency into Korean Won, trade during Seoul's market hours, and also deal with local settlement rules and tax filings. With all these frictions stacked up, most people simply give up. What ADRs do is "translate" a foreign stock into a standard US stock: priced in US dollars, traded during US market hours, and orderable through US brokers.

What Hynix is after isn't just money

This time, Hynix isn't listing existing shares but is issuing 17.79 million new shares, making it a capital-raising ADR—allowing US investors to buy while actually raising fresh capital to invest in the Yongin wafer fab, Cheongju advanced packaging facilities, and EUV lithography equipment.

But fundraising is just the surface-level accounting; the deeper layer is valuation.

It holds close to 60% of the HBM market (based on public data as of early 2026) and is an indispensable supplier to NVIDIA. Yet its stock price listed in Korea has long been cheaper than its US peer Micron—according to media estimates, Micron has been about 30% more expensive on average over the past decade or so. Why? A major reason is its status as a "Korean stock," which filters out a batch of potential buyers due to the barriers to entry of the Korean market.

The ADR transforms it from an "Asian stock" into a "US stock." Some analysis suggests that once listed in the US, it becomes eligible for inclusion in indices like the NASDAQ 100. Passive funds tracking these indices would then have to allocate to it proportionally, expanding the buyer pool from "those who can navigate the Korean market" to global US dollar capital. Interestingly, ADR and Korean underlying stock prices are linked. If the valuation is genuinely lifted, it lifts the entire Hynix entity, and the underlying stock in Korea also benefits—the goal was never for the ADR to be more expensive than the underlying stock, but to enlarge the pool.

The same chips, the same profits, but a different listing location can lead to a different valuation. This might be what Hynix truly wants.

So how exactly does it differ from the underlying stock?

The differences between an ADR and its underlying stock for the same company lie in a few easily overlooked details.

First, price inequality. One ADR does not necessarily equal one underlying share. The depositary bank sets a ratio; it could be one ADR for half a share, or one ADR for several shares. Therefore, you cannot directly compare the US dollar price of SKHY with the Korean Won price in Seoul; you must first convert using the ratio and exchange rate.

Second, the hidden door of exchange rates. The value of an ADR inherently contains an exchange rate layer, theoretically roughly equal to "Underlying stock price × Depositary ratio × Korean Won to US Dollar exchange rate." What does this mean? Even if Hynix rises in Seoul, as long as the Korean Won depreciates sharply enough against the US Dollar, your SKHY might not rise but could even fall. Underlying stock investors don't need to worry about this exchange rate calculation, but ADR investors must account for it.

Third, price discrepancies and arbitrage. The two markets' trading hours are not synchronized. When Seoul has already closed and New York just opened, a premium or discount can briefly appear between the ADR and the underlying stock. This is when arbitrageurs step in—through the "issuance" and "cancellation" mechanisms of depositary receipts, they pull the prices on both sides back into alignment. So in the long run, they stay very close, but that small gap during the trading day is always there.

Then there's the procedure for dividends. When Hynix pays a dividend, the money first goes through the depositary bank's hands, is converted into US dollars, and then distributed to you. The bank takes a custody fee, and in Korea, a tax is withheld upfront according to foreign investor standards—for the same dividend payment, the amount that ends up in the ADR holder's pocket is often a bit thinner than that for the underlying shareholder.

The last point is something you don't usually think about, but it can be fatal if it happens: cancellation risk. Since the ADR program is set up by the company and the depositary bank, it can theoretically be terminated. If that day comes, the certificates you hold would either be forcibly converted into Korean underlying shares or settled in cash, and the choice may not be in your hands.

So, back to the initial question: Is the SKHY you buy on NASDAQ Hynix?

Yes, and not entirely. What you're buying is a warehouse receipt for Hynix—its price movements largely follow that "case of wine" in Seoul, but with exchange rates, time differences, and the depositary bank's various fees in between.

Understanding this layer makes it clear why the same company can have two prices. In essence, an ADR is never the underlying stock itself; it's just a path to the underlying stock. This path is convenient, but not entirely free.