SK Hynix Postpones Plan to Take Solidigm Public
SK Hynix has halted plans to go public with Solidigm, its California-based NAND flash subsidiary, on the U.S. stock market amid market volatility and opposition from financial authorities.
Solidigm was considering an initial public offering (IPO) in the United States as early as next year, potentially valuing the subsidiary at up to US$150 billion.
“We have decided to halt its review of a pre-IPO fundraising round and a subsequent IPO after taking into account overall capital market conditions,” the South Korean chipmaker said.
Solidigm has explored various funding options, including a potential IPO, to finance a new fab in the U.S. to meet growing AI memory demand, SK Hynix said in a regulatory filing on Friday.
“While SK Hynix and Solidigm continue to deliver solid business performance, financial market volatility has increased, contributing to a broader correction in semiconductor stocks.”
SK Hynix noted that the decision came after “comprehensively assessing [the] business conditions.” The chipmaker had sought for preparations of pre-initial public offering and an initial public offering (IPO) of Solidigm on the U.S. stock market.
“This decision does not reflect any change in Solidigm’s growth prospects or investment needs,” SK Hynix said. The chipmaker reasoned that new U.S.-based production facilities would be necessary to meet rising demand for memory chips in the AI era.
An IPO would allow Solidigm to attract outside capital and increase SK Hynix’s consolidated cash flow, which could support capital expenditures and shareholder returns through dividends, share buybacks and cancellations.
An IPO could also help Solidigm establish its own market valuation and unlock growth potential that investors had yet to fully recognize in SK Hynix’s share price, the company said.
The company had considered both direct investment and an IPO as potential sources of funding. Those plans were put on hold, however, as growing financial market volatility and a fall in semiconductor shares made the environment less favorable for a public offering.
Authorities have also voiced concern and stated that going public with Solidigm would fall into Korea’s split-listing rules, according to heads of both the Financial Supervisory Service and the Financial Services Commission.
“It falls under the guidelines on split listings,” FSC chairman Lee Eog-weon said during a parliamentary audit held Thursday, adding that the move would also require SK Hynix and SK Square, both of which sit above Solidigm in the group’s ownership structure, to fulfill shareholder protection obligations.
Industry observers say the pullback in peer stocks has prompted renewed questions over whether Solidigm could command its originally anticipated valuation in an IPO.
