According to a Friday report citing unnamed industry sources, SK hynix has decided to no longer pursue a U.S. initial public offering (IPO) for its subsidiary Solidigm.
This decision comes as South Korean regulators intensify scrutiny of duplicate listings between parent and subsidiary companies.
The head of South Korea's Financial Supervisory Service, Lee Chan-jin, stated on the 19th of this month that Solidigm's U.S. listing could potentially involve South Korea's duplicate listing regulatory rules; the chairman of the Financial Services Commission, Lee Eok-won, also stated on the 22nd that Solidigm falls under the relevant guidelines, and that SK hynix and its upper-tier parent company need to fulfill their obligations to protect shareholder rights.
Regulatory Pressure and Shareholder Rights Controversy Intensify
Solidigm originated from SK hynix's acquisition of Intel's NAND flash memory and solid-state drive business. SK hynix completed the integration of the relevant business in 2021, and Solidigm currently focuses on enterprise solid-state drives (eSSD) for artificial intelligence data centers.
Previously, according to media reports, Solidigm was considering a Nasdaq listing, potentially as early as 2027, with a valuation of up to $150 billion. The IPO financing was expected to provide funds for expanding production capacity and research and development investment, while also reducing the pressure on SK hynix to directly bear the related investments.
However, the potential listing also sparked concerns in the South Korean market about dilution of shareholder rights. If Solidigm issues new shares to external investors, SK hynix's stake in it could decline, and it would also need to share some profits with external shareholders in the future.
SK hynix previously stated on October 1 that no decision had been made regarding Solidigm's capital operations, and that the company was evaluating options including internal funds and external financing, emphasizing that any decision would take long-term corporate value and shareholder interests as important considerations. This news of abandoning the U.S. IPO suggests that its financing arrangements may be adjusted, but the company has not yet publicly confirmed this decision.
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