SK hynix's U.S. subsidiary Solidigm is significantly expanding its supply of enterprise SSDs (eSSDs) to global artificial intelligence (AI) cloud companies, rapidly enhancing its competitiveness in the NAND business. Ahead of its upcoming Nasdaq initial public offering (IPO), concerns about potential 'dual listing' have emerged, but some argue this undermines the fundamental business goal of securing leadership in AI storage.
According to a report from Goldman Sachs on the semiconductor sector, Solidigm's market share in the high-capacity enterprise SSD market, based on quad-level cell (QLC) technology, exceeded 60% in the first half of the year, showing a steep upward trend. Goldman Sachs noted, "By maintaining a 100% utilization rate of its main production lines, Solidigm has solidified its performance justification for entering the U.S. capital markets." The analysis indicates that as AI data centers expand, the demand for QLC-based eSSDs, known for their power efficiency and space utilization, is increasingly concentrated on Solidigm.
Solidigm has been viewed as a troubled asset for SK hynix. Since its establishment in 2021 following SK hynix's acquisition of Intel's NAND division, it has recorded massive losses amounting to trillions of won, increasing the financial burden on its parent company.
However, thanks to its monopoly supply in the large-capacity eSSD market, Solidigm successfully turned a profit in the first quarter of 2024, achieving a complete turnaround. After generating an annual profit of 1.4 trillion won, it reported a net income of 5.8 trillion won in the first half of this year, continuing its upward trajectory.
As Solidigm's entry into the U.S. stock market becomes more tangible, concerns about 'dual listing' have surfaced. However, industry experts agree that this IPO is fundamentally different from typical domestic dual listing controversies. Unlike a physical split that separates a core business unit for re-listing, this structure involves a U.S. entity acquired through overseas mergers and acquisitions entering the local capital market.
Choi Jun-sun, an emeritus professor at Sungkyunkwan University's Law School, stated, "Separating a profitable business for a typical physical split and a foreign subsidiary entering the local capital market are entirely different types. Rather than questioning the formality of the listing, we should assess how the raised funds will be utilized and whether existing shareholder value will be enhanced."
At the SK Group level, a long-term investment of over 1,000 trillion won is needed to expand AI infrastructure, especially as simultaneous expansions of semiconductor fabs are being pursued globally, including in the U.S. While SK hynix focuses its cash on investments in high-bandwidth memory (HBM) and next-generation DRAM, Solidigm aims to independently raise funds to establish its own NAND factory and pursue research and development (R&D).
The timing for the IPO is also favorable. International investment banks like Morgan Stanley estimate that Solidigm, valued at $8.8 billion (approximately 11.85 trillion won), could achieve a market valuation of up to $150 billion (about 200 trillion won) upon its Nasdaq listing, as the valuations of global storage companies like SanDisk and Kioxia continue to rise.
Due to the issuance of new shares, some dilution of SK hynix's stake is inevitable. However, if Solidigm continues to grow and accelerate its growth rate, the absolute value of the stake held by SK hynix is likely to increase significantly.
An industry insider remarked, "It is more beneficial for shareholders in the long run to increase corporate value tenfold on the global stage, even if it means a slight reduction in stake, rather than having the parent company hold 100% and cede the market to China or competitors. In the current atmosphere of leading the AI storage market, minor stake dilution will not pose significant constraints on business operations."
* This article has been translated by AI.
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