SK Hynix has suspended consideration of an initial public offering (IPO) for its Solidigm unit, which needs a new factory in the US. The company's shares fell by 3%, then recovered most of the losses and ended the day up by 4%.
The Korean Financial Supervisory Service (FSS) reported on Monday that a listing in the US could violate rules limiting dual listings, according to CNBC. SK Hynix, in turn, cited market volatility. FSS Governor Lee Chang-jin stated that the agency is assessing whether a review of the listing is necessary under minority shareholder protection regulations.
In a statement, SK Hynix said that the correction in the semiconductor segment prompted a reevaluation of whether the listing aligns with shareholder interests. Solidigm's forecasts and investment needs remain unchanged. Solidigm's factories have limited capacity to increase production amid growing demand for memory for artificial intelligence, which explains the need for a new site in the US.
Previously, SK Hynix considered the listing as a way to finance factories while maintaining dividends and share buybacks with subsequent cancellation. A separate listing could value Solidigm as an independent company—a growth that SK Hynix believes the current valuation does not reflect. Payouts are already increasing: in August, the board of directors approved a buyback program of 40 trillion won with share cancellation, and the target capital return level was raised to more than 50% of cumulative free cash flow by 2027.
The company did not name a replacement for the listing and continues to decide when, how much, and how to finance investments. Earlier this week, KOSPI faced a sell-off in the artificial intelligence segment, starting with chips. The Nasdaq Composite index lost 2.6% on Thursday—the worst session since June. Data center operators for artificial intelligence also declined: CoreWeave fell by 10% on Thursday, and Australian NextDC by nearly 40% on Wednesday. Meanwhile, Nvidia CEO Jensen Huang told CNBC that he does not expect a memory surplus by 2029.
Korean chip exports in early October rose by 222.5% year-on-year, but KOSPI fell by 20.72% over 10 sessions by October 20. SK Hynix will disclose its payout plans along with third-quarter results, which are expected on October 28, according to company documents.
This material is prepared solely for informational purposes and does not constitute financial advice or a recommendation.
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