SK hynix has decided to halt its plans for a U.S. stock market listing of its NAND flash subsidiary, Solidigm. The decision comes amid increased uncertainty in corporate valuations due to recent corrections in semiconductor stocks and growing opposition from existing shareholders, which diminished the perceived benefits of the IPO. Additionally, concerns have been raised regarding financial authorities' stance that listings of overseas subsidiaries could fall under regulations against dual listings.
According to industry sources on October 23, SK hynix has decided to stop reviewing plans for Solidigm's pre-IPO (pre-initial public offering) and IPO. This decision was made after considering the recent volatility in financial markets and the adjustments in semiconductor company stock prices.
SK hynix stated, "The growth potential or investment necessity for Solidigm has not changed. However, given the current capital market conditions and stock price trends, we believe it is necessary to reassess whether an IPO is the most advantageous choice for SK hynix and existing shareholders."
Solidigm was established in 2021 when SK hynix acquired Intel's NAND flash and solid-state drive (SSD) business.
Initially, SK hynix considered Solidigm's U.S. listing to respond to the increasing demand for NAND due to the expansion of artificial intelligence (AI). The company assessed that its existing production facilities would not be sufficient to meet the growing demand for enterprise solid-state drives (eSSDs) for AI data centers. Therefore, it had been exploring direct investments and external capital through an IPO to secure new production facilities in the U.S.
The decision to halt the IPO appears to have been influenced by shareholder opposition and the burden of declining stock prices. Following the announcement of Solidigm's U.S. listing plans, concerns arose among SK hynix shareholders that the separate valuation of the subsidiary could undermine the value of the parent company's shares. Even if external investment was secured through the IPO, there were doubts about whether it would lead to the anticipated increase in corporate value.
The complex ownership structure involving SK Group, SK Square, SK hynix, the U.S. intermediate holding company AI Company, and Solidigm has also fueled controversy. There are fears that if Solidigm were to be listed separately, the parent company's stock price might not adequately reflect the value of its assets, exacerbating the so-called "dual listing discount."
Recent financial market conditions have also changed. As semiconductor companies have generally faced stock price corrections, uncertainty has grown regarding whether Solidigm could achieve the expected corporate valuation in the U.S. market. The stock price of U.S. NAND competitor SanDisk has fallen approximately 40% from its peak in June.
The financial authorities' moves regarding dual listing regulations have also been cited as a burden during the IPO process. Lee Ok-won, chairman of the Financial Services Commission, stated during a National Assembly audit that Solidigm's U.S. listing would be subject to dual listing regulations. Earlier, Lee Chan-jin, head of the Financial Supervisory Service, also indicated that there could be potential issues related to dual listings.
However, SK hynix maintains that the government's tightening of dual listing regulations is not the direct reason for halting the IPO. The company explained that the decision was based on a comprehensive review of market conditions and shareholder value, independent of the financial authorities' statements.
A representative from SK hynix stated, "Our assessment of the economic effects of the IPO and the growth needs of Solidigm has not changed. We have made this decision considering the current market conditions from the perspective of shareholder value."
While the IPO efforts have been halted, plans to expand Solidigm's production capacity remain in place. SK hynix emphasizes the need to secure new production facilities in the U.S. to meet the increasing demand for NAND in the AI era. Consequently, the company is expected to reassess investment methods, including direct investments and external funding.
A representative from SK hynix remarked, "Expanding Solidigm's production capacity and enhancing its competitiveness are critical tasks. We will continue to explore various options to enhance Solidigm's growth while also benefiting existing shareholders, considering the timing, scale, and funding methods for investments."
* This article has been translated by AI.
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