SK Hynix is considering an initial public offering (IPO) for its U.S. subsidiary Solidigm, despite ongoing concerns about dual listings. This move is interpreted as part of the company's strategy to secure a NAND production base in the U.S. and expand its artificial intelligence (AI) storage business. The decision to pursue a separate listing for its subsidiary, despite having ample cash reserves, is also seen as a way to distribute the burden of large-scale investments.
According to industry sources and foreign media reports, Solidigm has selected Goldman Sachs and Morgan Stanley as lead underwriters for its IPO, which could take place as early as next year. The anticipated fundraising amount is up to $15 billion, with a projected valuation of up to $150 billion. SK Hynix has stated that no decision has been made regarding the IPO.
The push for an IPO is linked to plans for establishing a NAND production base in the U.S. Recently, Reuters reported that SK Hynix is in discussions with the U.S. government to bring in American-made semiconductor equipment to its factory in Dalian, China, and has proposed building a NAND factory in the U.S. through Solidigm. Observers suggest that the IPO is being considered to secure funding for this new factory investment. There are also reports that discussions are underway to lease part of Intel's semiconductor facility in Ohio.
Solidigm currently relies on its Dalian factory for NAND flash production. The uncertainty surrounding new investments due to U.S. export restrictions on semiconductor equipment to China has increased. Establishing a production base in the U.S. would reduce dependence on China and enhance supply stability for local customers. Solidigm's recent hiring of Andres Castrillon, a former Qualcomm executive, as vice president of public affairs, and its contract with a lobbying firm led by Brian Ballard, who is close to former President Donald Trump, are seen as steps toward expanding its U.S. operations.
The growth of the enterprise solid-state drive (eSSD) market for AI data centers is another reason for the expedited IPO. As the AI industry expands from training to inference, the importance of NAND and SSDs for storing and processing large volumes of data is increasing. Solidigm has strengths in high-capacity quad-level cell (QLC) SSDs. The company aims to enhance its competitiveness by increasing production capacity and research and development investments during this market growth phase.
A key point of concern is SK Hynix's financial situation. As of the end of the first half of this year, the company had a net cash position of 69 trillion won, which is projected to increase to 141 trillion won by the end of the year. Nevertheless, the consideration of an IPO worth up to 20 trillion won is viewed as a decision based on investment efficiency and the speed of business expansion rather than a lack of funds. With significant investments needed for high-bandwidth memory (HBM), next-generation DRAM, and advanced packaging, attracting external capital through Solidigm would allow SK Hynix to focus its resources on its core memory business while simultaneously expanding its NAND operations.
However, concerns about potential damage to shareholder value due to dual listings remain a burden. Lee Chan-jin, head of the Financial Supervisory Service, stated during a parliamentary audit on October 19 that Solidigm's listing could violate dual listing regulations. Both ruling and opposition parties are calling for shareholder protection. There are concerns that if Solidigm is listed separately, it could lead to a discount in the corporate value of the parent company, which includes SK Group, SK Square, and SK Hynix.
On the other hand, some argue that if the IPO improves Solidigm's production capacity and profitability, it could offset the impact of a decline in ownership percentage. Bloomberg Intelligence has assessed that Solidigm's IPO would positively affect SK Hynix's long-term performance. Attracting external capital through the IPO would enable Solidigm to secure funding for its capital investments, allowing SK Hynix to maintain its financial flexibility to invest in other memory businesses such as HBM and server DRAM.
* This article has been translated by AI.
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