South Korean memory chip maker SK hynix has abandoned further consideration of plans for an initial public offering (IPO) of its American subsidiary Solidigm. The decision was made amid instability in financial markets and falling stock prices of semiconductor companies, although the Solidigm business was previously seen as one of the largest potential debutants on the U.S. stock market.
On October 23, SK hynix officially announced this. Additional details are provided by South Korean media outlets The Korea Times and Yonhap.
The company has stopped considering both the preliminary raising of private investments (pre-IPO) and the subsequent listing of Solidigm on a U.S. exchange. SK hynix explained that current market conditions have forced a reassessment of the feasibility of this method of financing from the perspective of the interests of existing shareholders.
In recent months, stock market volatility has increased, and shares of semiconductor manufacturers have suffered a significant correction. In the opinion of SK hynix management, under such conditions a stock market listing may not ensure the necessary valuation of the Solidigm business.
Earlier, «Курс України» reported that Solidigm was considering a U.S. stock market listing as early as 2027. According to preliminary estimates, the IPO could ensure raising about 15 billion dollars at a company valuation of up to 150 billion dollars.
These figures were indicative, not approved parameters of the offering. After the new decision by SK hynix, their implementation within the previously discussed scenario is not currently foreseen.
A separate issue was concerns about the impact of the IPO on the shareholders of the parent company. As Yonhap reports, South Korean financial regulators have drawn attention to the risks of the so-called dual listing, when a subsidiary goes public separately from a company whose shares are already traded on the market.
In such a situation, investors fear that part of the business value and interest in its shares will shift from the parent company to the subsidiary. At the same time, SK hynix representatives stressed that the regulators' remarks were not the direct reason for halting the IPO preparation. The company cites the state of the market and the need to protect shareholder interests as the main factor.
Solidigm specializes in NAND flash memory and enterprise SSD drives used in servers and data centers. The company was created on the basis of Intel's memory business, acquired by SK hynix in a deal worth approximately 9 billion dollars.
The plans to go public were primarily related to the need to finance the expansion of production in the United States. The growth in demand for artificial intelligence infrastructure increases the need for high-capacity storage, and Solidigm's existing production capacities are insufficient to realize all growth opportunities.
Despite abandoning the current IPO scenario, SK hynix is not canceling Solidigm's investment plans. The company will continue to evaluate the timing, scale and methods of financing production expansion, including the possibility of direct investments by the parent structure.
SK hynix stressed that the decision does not mean a deterioration in the assessment of the prospects of the American business. It is about a change in the approach to raising capital, not about abandoning the development of memory production for artificial intelligence systems.
At the same time, the company did not report whether it plans to return to the question of a public offering of Solidigm shares in the future and under what conditions this might happen.
