0
/Yonhap

SK Hynix has abruptly withdrawn plans to list its U.S. subsidiary Solidigm on the Nasdaq. The company determined that it needed to reconsider the plans in light of recent financial market volatility and share price trends. Despite the decision to abandon the Nasdaq listing, SK Hynix plans to continue its efforts to support Solidigm's growth and enhance shareholder value.

In a regulatory filing on Oct. 23, SK Hynix said, "Our overseas subsidiary Solidigm has been reviewing various financing options to expand production capacity and strengthen competitiveness, but has decided to discontinue its review of a pre-IPO and IPO after comprehensively considering capital market conditions and other factors."

In a statement published on its newsroom website the same day, the company also said, "Solidigm will discontinue its review of a pre-IPO and IPO," explaining that "given recent capital market conditions and share price trends, we determined that it was necessary to reassess whether an IPO would currently be the most beneficial option for SK Hynix and its existing shareholders."

Solidigm was established after SK Hynix acquired Intel's NAND flash memory and solid-state drive (SSD) businesses in 2021. Its revenue in the first half of this year reached 12.25 trillion won, accounting for approximately 9% of SK Hynix's total revenue. Solidigm accounts for about 12.9% of SK Hynix's overall corporate value. Amid growing global demand for AI memory, SK Hynix had been considering securing local production facilities for Solidigm. To obtain the investment funds needed and ensure efficient capital allocation, it had compared and reviewed various options, including direct investment and raising external capital through an IPO.

SK Hynix believed that attracting external capital through an IPO could increase its consolidated cash flow, allowing it to secure funds for capital expenditures while also expanding its capacity for shareholder returns through dividends, share repurchases and share cancellations. It also expected that an IPO would provide an opportunity for Solidigm to receive an appropriate valuation and for the market to reassess its growth potential, which has not been fully reflected in SK Hynix's current corporate value. Regarding this, SK Hynix said, "Reviewing an IPO was one of the options for securing new sources of growth funding for Solidigm and enhancing shareholder value for SK Hynix."

Despite the solid performance of SK Hynix and Solidigm, the company reportedly reconsidered the effectiveness of an IPO as financial market volatility increased and semiconductor stocks underwent a correction. Recently, mounting controversy over "dual listings" has also intensified pressure from politicians and financial regulators. However, SK Hynix maintains that this was unrelated to the direct reasons for withdrawing Solidigm's Nasdaq listing plans.

"Our assessment of the economic benefits of an IPO and the need for Solidigm's growth has not changed," SK Hynix said. "Expanding Solidigm's production capacity and strengthening its competitiveness remain important priorities."

"SK Hynix will also continue exploring various options to support Solidigm's growth and enhance the interests of existing shareholders, while reviewing the timing and scale of investments and financing methods," the company added.

Yang Hyun-kyung, an analyst at iM Securities, said, "The withdrawal of Solidigm's U.S. listing plans could ease concerns over dual listings involving SK Hynix."

"As the decision reflects concerns about potential damage to shareholder value, it could alleviate worries about valuation discounts and equity dilution resulting from a dual listing. However, it could also reduce opportunities to raise external capital and potentially increase the burden of investment funding in the future," Yang said.

                                                                                                          Yeon Chan-mo