SK Hynix’s plans to launch its US memory unit Solidigm on an American exchange at a listing projected to be worth $15 billion have been called off. The decision was made due to shareholder pushback, in addition to warnings from South Korean regulators that the deal could dilute minority investors.
The filing and what was scrapped
A regulatory filing dated October 23 held details of the filing. SK Hynix has also scrapped a separate fundraising round that was running alongside its planned public offering. Reuters reported in September that the private round was expected to raise about 5 trillion won ($3.8 billion), and had a Nasdaq listing lined up for as early as 2027.
Solidigm had already appointed Goldman Sachs and Morgan Stanley to lead the planned sale. The unit makes NAND flash memory and solid-state drives (SSDs), which provide high-capacity storage for servers and AI data centers.
Solidigm was established after SK Hynix acquired Intel’s NAND and SSD business in a deal worth about $9 billion, announced in 2020 and completed in 2021. SK Hynix owns the unit through a U.S. holding company called AI Company.
Why Seoul’s regulators got involved
Most of the pressure came from South Korean regulators. They had concerns that listing Solidigm separately could amount to a “duplicate listing.” This happens when a company lists a subsidiary on its own, which could potentially reduce the value of existing shareholders’ stakes in the parent company.
Financial watchdog chief Lee Chan-jin told lawmakers that both his agency and the Financial Services Commission considered Solidigm subject to rules restricting such listings. FSC chairman Kim Byoung-hwan said the same rules would apply even if Solidigm listed overseas while speaking to a parliamentary audit.
SK Hynix stock already sliding
SK Hynix shares were already in the red just before the news. Seoul-listed stock dropped 4.2% to 1,172,000 won in early trading on October 23, according to Yahoo Finance.
SK Hynix shares have fallen 58% from their June high as investors worry about weaker memory demand and sell shares across the chip sector, the Business Times reported.
Scrapping the listing did little to help SK Hynix shares. Concerns regarding AI spending continued to weigh on markets. On October 22, the Nasdaq Composite had seen a 2.6%, drop, while the Philadelphia Semiconductor Index dipped by 6.7%.
Meta’s rising AI spending and credit default swap costs hitting a record high also added to investor concerns.
What SK Hynix says next
SK Hynix said the decision was about timing, and does not change its plans for Solidigm in the long run. “This decision does not reflect any change in Solidigm’s growth prospects or investment needs,” the company said in a statement quoted by the Business Times.
The company added that it would continue to review how much to invest in Solidigm’s U.S. expansion and when to make those investments. It also stated that new production capacity would still be required to meet the growing demand for memory used in AI systems.
Investors will be watching how SK Hynix funds Solidigm’s U.S. expansion without an IPO. They would also be interested in whether South Korea’s rules affect plans by other major companies to list their overseas subsidiaries.
Don’t just read crypto news. Understand it. Subscribe to our newsletter. It's free.