Solidigm Caught Up in 'Double Listing' Controversy... How Will SK Hynix Persuade Shareholders?

[Anchor]

Controversy is brewing around Solidigm, a sub-subsidiary of SK Hynix that manufactures data center storage devices. Reports that it plans to list on the U.S. market next year have sparked criticism that this constitutes a double listing.

Reporter Kim Hye-min has the details.

[Reporter]

In 2021, SK Hynix acquired Intel's NAND and SSD business to launch Solidigm.

Controlled through its U.S. intermediate holding company, AI Company, the sub-subsidiary produces storage devices essential for data centers.

Foreign media outlets report that Solidigm has selected underwriters to oversee its listing and is pushing to enter the U.S. market.

Solidigm's corporate value is estimated at up to $150 billion, with the amount to be raised through its initial public offering projected at up to $15 billion.

However, a double-listing controversy has emerged.

In the corporate governance structure running from SK Inc., SK Square, SK Hynix, and AI Company to Solidigm, if Solidigm goes public, there will be four listed companies across a five-tier structure.

If Solidigm issues new shares and sells them to outside investors, profits would have to be shared accordingly, potentially diminishing the value of its parent companies.

In fact, in early August, when reports of the listing first surfaced, SK Hynix shares plummeted by more than 10% in a single day.

Governor Lee Chan-jin of the Financial Supervisory Service stated during a parliamentary audit that Solidigm's listing constitutes a double listing.

[Lee Chan-jin / Governor, Financial Supervisory Service: Whether this constitutes a double listing is something both the Financial Services Commission and we at the FSS have already evaluated.]

If deemed a double listing, the SK Hynix board of directors would be subject to five major obligations, including shareholder impact assessments and the formulation of shareholder protection measures, though a direct shareholder consent procedure is not legally required.

Some, including Bloomberg, have offered positive interpretations, noting that it is beneficial in that Solidigm can secure its own investment capital without relying on funds from its parent company.

[Kim Kwang-seok / Adjunct Professor, Graduate School of International Studies, Hanyang University: Because foreign investors can also invest from abroad, it has the effect of depriving existing investors of room for stock price growth. From the company's perspective, it could serve as a means to raise more capital.]

With financial authorities having clarified their stance that it constitutes a double listing, how SK Hynix will persuade existing shareholders as to why the listing is necessary is expected to be the key variable.

(Video Editing: Ahn Yeo-jin, Design: Zegal Chan, Park Cheon-woong)
※ Please note: This article was translated by AI and may contain errors.