Will Samsung join ADR wave among Asian chipmakers?

Samsung Electronics headquarters in Suwon, Gyeonggi Province / Yonhap

Samsung Electronics could become the next major Asian chipmaker to consider an American depositary receipt (ADR) listing, analysts said Sunday, as rivals seek greater access to U.S. investors amid the capital-intensive race in AI memory.

ADRs allow U.S. investors to gain exposure to foreign companies without those companies directly listing their ordinary shares on a U.S. exchange. They could broaden Samsung's global investor base, increase its visibility among U.S. institutions and potentially pave the way for inclusion in global exchange-traded funds (ETFs) and benchmark indices.

"Given the company's current undervaluation and favorable market conditions, the ADR scenario cannot be ruled out," said Kim Dong-won, head of research at KB Securities. "It is viewed as a strong capital policy option to improve access for global investors, and related discussions are expected to gain momentum."

Analysts point to TSMC as an example of how ADRs can expand a chipmaker's international investor base. TSMC is held by 9,994 global funds through its ordinary shares, compared with 12,748 for SK hynix, a relatively narrow gap. But about 4,500 global funds and ETFs hold only TSMC's ADRs, according to Yoon Jae-hong, an analyst at Mirae Asset Securities.

Park Sang-hyun, an analyst at Clepsydra Capital, said Samsung's stronger balance sheet gave it more flexibility than SK hynix. Yet, he warned that relying on its existing cash position could become a strategic risk as the AI investment cycle accelerates, as its "original capital expenditure plan is likely undersized for the AI cycle."

"Samsung cannot keep ignoring U.S. capital markets and still stay competitive. We are clearly seeing a similar shift in tone inside Samsung as what already played out at SK," Park wrote in a note on Smartkarma, an investment intelligence platform.

"The usual pushback around ADR downsides, such as tighter disclosure and higher governance scrutiny, is getting repriced. Management is becoming more willing to absorb those tradeoffs," he added.

Still, analysts expect Samsung to move cautiously. Park said the company was likely to monitor how SK hynix executes its ADR listing before making any decision of its own.

Asian chipmakers have recently been seeking to secure massive investment capital through ADR offerings, as expectations grow that the AI memory boom will last longer than previously anticipated. The move is also seen as a strategy to expand their influence within the U.S. AI ecosystem.

SK hynix disclosed on Wednesday that it had decided to issue 17.79 million common shares worth 45.45 trillion won ($29.6 billion), which will be deposited with overseas institutions. Depositary receipts backed by the shares are expected to be issued and listed on Nasdaq on July 10. The capital will be used entirely for facility investment.

Kioxia, Japan's leading NAND flash memory producer, also announced plans to issue deposited shares at its annual general meeting on Thursday. Its chief financial officer said the company aimed to issue them in the April-June period, the start of its next fiscal year.