SK Hynix Abruptly Halts Solidigm's IPO Process Citing Market Conditions

SK Hynix has decided to halt the process of listing its sub-subsidiary Solidigm on the U.S. stock market.

SK Hynix announced in a regulatory filing today (October 23) that "while overseas subsidiary Solidigm has reviewed various fundraising options to expand production capacity and strengthen competitiveness, we have decided to suspend the review of the pre-IPO (pre-Initial Public Offering) and IPO, taking into consideration overall capital market conditions."

This comes 79 days after news of its IPO preparations became known on August 5.

SK Hynix stated, "Considering recent capital market conditions and stock price trends, we determined that it is necessary to re-examine whether an IPO is the most advantageous choice for SK Hynix and its existing shareholders."

Solidigm is a company launched after SK Hynix acquired Intel's NAND flash and solid-state drive (SSD) business in 2021.

SK Hynix owns a 100% stake in Solidigm through its U.S. intermediate holding company, AI Company.

As the market grows due to the expansion of artificial intelligence (AI), securing investment resources necessary for building production facilities and developing technology in the U.S. has been cited as the main justification for the listing.

Strong backlash from shareholders and falling stock prices appear to have had a decisive impact on the suspension of the listing.

In addition, concerns over "double listing" overlapped, with worries that if Solidigm were to list separately under the multi-layered governance structure of "SK Inc. to SK Square to SK Hynix to AI Company to Solidigm," it could worsen a discount phenomenon where the parent company's stock price fails to fully reflect the value of its assets.

Solidigm accounts for approximately 12.9% of SK Hynix's total corporate value.

The environment surrounding the IPO has also shifted as financial market volatility recently increased and semiconductor company stock prices underwent corrections.

In the case of U.S. NAND company SanDisk, its stock price recently dropped to a level 40% lower than its peak in June.

With peer company stock prices undergoing significant corrections, the need to reassess whether Solidigm could also be recognized for its initially expected level of corporate value through a listing has grown.

Amid controversies surrounding Solidigm's "double listing," Financial Supervisory Service Governor Lee Chan-jin and Financial Services Commission Chairman Lee Eok-won successively emphasized that it is subject to regulation and stepped up pressure.

The guidelines on double listing by the Financial Services Commission and the Korea Exchange in principle prohibit the double listing of a parent company and its subsidiary.

To be exceptionally granted permission for a listing, the parent company must fulfill five obligations, including a shareholder impact assessment, preparation of shareholder protection measures, and board approval.


SK Hynix explained that the government's tightening of double listing regulations was not the direct background for the decision to halt the listing, but rather the result of comprehensively weighing market conditions and shareholder value.

An SK Hynix official said, "Our judgment regarding the economic effects of the IPO or the necessity of Solidigm's growth has not changed," adding, "It was judged from the perspective of shareholder value in consideration of current market conditions."

How to secure investment resources in the U.S. for Solidigm remains a task.

As new factories are needed to cooperate with U.S. big tech companies and expand the supply chain in the U.S., SK Hynix is in a position where it must review various fundraising methods, including direct investment.

SK Hynix stated that it will review the timing, scale, and financial resource procurement methods of investments to seek ways to simultaneously enhance Solidigm's growth and the interests of existing shareholders.

An SK Hynix official said, "There are no plans to re-examine the listing at this time," adding, "Which method is more advantageous to existing SK Hynix shareholders is the criterion for determining the fundraising method."

(Photo: Provided by Solidigm website, Yonhap News)
※ Please note: This article was translated by AI and may contain errors.