SK Hynix halts Solidigm US IPO review; shares fall up to 3%
The South Korean chipmaker dropped a potential US listing for its subsidiary Solidigm, citing market volatility, Korean dual-listing rules and the need to fund a new US fab.
At a glance
- SK Hynix shares fell as much as 3% in Seoul after it halted a review of a US IPO for subsidiary Solidigm.
- The company cited rising market volatility, a semiconductor stock correction and South Korean dual-listing rules.
- SK Hynix said Solidigm's investment needs are unchanged and it will seek alternative financing.
Shares of South Korean chipmaker SK Hynix fell as much as 3% in Seoul on Friday morning after the company halted a review of a potential US initial public offering for its subsidiary Solidigm.
In a statement, the company said Solidigm would stop reviewing pre-IPO and IPO options, after assessing recent conditions in capital markets and share price trends. SK Hynix added that it is exploring other ways to fund a new US semiconductor fabrication plant, pointing to growing demand for AI memory.
Why the listing was shelved
An IPO could have financed Solidigm's expansion and given SK Hynix more financial flexibility for shareholder returns, including dividends, share buybacks and share cancellations, the company said. But it said volatility in financial markets had risen and contributed to a broader correction in semiconductor stocks, prompting a reassessment of whether a listing would benefit existing shareholders.
SK Hynix also said Solidigm's existing production facilities have limited capacity to serve rising AI-driven memory demand, underlining the need for additional manufacturing capacity in the United States.
Korean regulatory scrutiny
The decision followed scrutiny from South Korea's financial regulator, which said Monday that a US listing of Solidigm could breach national rules restricting dual listings, according to Reuters. Financial Supervisory Service Governor Lee Chan-jin said regulators were examining whether the IPO would require a review under rules designed to protect minority shareholders.
SK Hynix said Solidigm's investment needs remain unchanged and that it will keep exploring alternative financing options to support the subsidiary's growth and enhance shareholder value.
Wider chip sell-off
The announcement comes as US technology stocks face pressure over worries about AI spending. The tech-heavy Nasdaq Composite slid 2.6% on Thursday, its worst session since June, while Nvidia fell 4.4% and Advanced Micro Devices dropped 8.1%.
Nvidia chief executive Jensen Huang told CNBC on Thursday that he does not expect an oversupply of memory chips by 2029, despite concerns over weakening demand.
AI data centre stocks have also come under pressure amid concerns over financing risks and the pace of AI infrastructure expansion. CoreWeave plunged 10% on Thursday, extending its monthly decline to 36%, while Australia's NextDC tumbled nearly 40% on Wednesday after cutting its earnings forecast.
Source: CNBC Top News.
Questions and answers
- Why did SK Hynix scrap Solidigm's IPO plans?
- SK Hynix said it halted the review after assessing capital market conditions and share price trends. The move also followed a South Korean regulator's warning that a US listing could breach rules restricting dual listings.
- How did SK Hynix shares react?
- SK Hynix shares were down as much as 3% in Seoul on Friday morning after the announcement.
- Will Solidigm still expand its manufacturing?
- SK Hynix said Solidigm's investment needs remain unchanged. The company is exploring alternative financing to support the subsidiary's growth and a new US semiconductor fabrication plant.
