SK hynix (000660) has decided to scrap plans to list Solidigm, its U.S. NAND flash subsidiary, on the Nasdaq. The chipmaker reversed course after the heads of the Financial Services Commission and the Financial Supervisory Service each raised concerns about duplicate listings.
SK hynix has decided to halt its push for an initial public offering of Solidigm in the United States and disclosed the decision on the 23rd, according to industry sources.
"Solidigm, our overseas subsidiary, has been reviewing various funding options to expand production capacity and strengthen competitiveness, but has decided to halt its review of a pre-IPO and an initial public offering after comprehensively considering capital market conditions and other factors," SK hynix said.
A senior industry official said the company decided to withdraw the listing plan after lawmakers raised the issue of duplicate listings during the parliamentary audit of government agencies, and as it sought ways to enhance shareholder value.
On the 1st of this month, SK hynix had said funding plans for the Solidigm listing were not finalized and stressed that long-term shareholder value was the standard for all its decisions. With the listing plan withdrawn, the pre-IPO work to attract outside investors ahead of the offering has also been halted.
Repeated public warnings from financial regulators are seen as having weighed heavily on the decision. Financial Supervisory Service Governor Lee Chan-jin told a parliamentary audit at the National Assembly's National Policy Committee on the 19th that "both the FSC and the FSS judge that this runs afoul of the duplicate listing rules." Lee also signaled that he would convey the regulators' concerns to SK hynix.
Financial Services Commission Chairman Lee Eok-won followed up at a parliamentary audit on the 22nd, making clear that Solidigm's U.S. listing falls under the duplicate listing guidelines. Lee said affiliates within a vertical ownership structure are also subject to the rules, stressing that both SK Square (402340) and SK hynix must fulfill their obligations to protect shareholders as parent companies.
With the two top financial regulators effectively reaching the same conclusion, the burden on SK hynix of pressing ahead with the listing rose sharply. The duplicate listing guidelines introduced by regulators in August apply to overseas listings as well as domestic ones. Under the rules, a parent company's board must fulfill five obligations: assessing the impact on shareholders, preparing shareholder protection measures, communicating with shareholders, passing a board resolution and making public disclosures.
Analysts noted that while domestic regulators would find it difficult to directly block the listing of an overseas entity, continued disputes over breaches of shareholder protection duties and political pressure could weigh considerably on management decisions.
Fierce shareholder opposition is also cited as a key reason for the withdrawal. Solidigm is the U.S. entity launched when SK hynix acquired Intel's NAND flash business in 2021. With the growth of the enterprise solid-state drive (eSSD) market for artificial intelligence data centers, some projected its valuation could reach as much as $150 billion (about 200 trillion won).
The market had initially expected Solidigm to list on the Nasdaq as early as next year and raise $10 billion to $15 billion. That was seen as a strategy to ease the financial burden through outside funding while SK hynix carries out large-scale investments in high-bandwidth memory (HBM) and next-generation chip production facilities.
Existing shareholders, however, argued that a separate listing of Solidigm could leave SK hynix's own valuation discounted. They also objected that new share issuance would dilute their indirect stakes and reduce their share of future profits.
Criticism of the duplicate listing spread further as domestic stocks tumbled recently and SK hynix shares went through a sharp correction. In the political arena, Rep. Ahn Cheol-soo of the People Power Party raised concerns about duplicate listings day after day, with calls for shareholder protection measures coming from both the governing and opposition parties.
