SK Hynix Investors Cheer Chey Tae-won’s Decision as Solidigm IPO Halt Spurs Rebound Hopes

Brokerages Say Solidigm Listing Halt Eases Duplicate-Listing Discount

SK Hynix Says It Will Continue Reviewing Fundraising Options

Shareholders Say They Support Chairman Chey’s Decision

SK Hynix’s decision to halt a planned U.S. listing of Solidigm is fueling expectations for a recovery in the chipmaker’s shares. Market experts said the move prioritized existing shareholders by easing concerns over a duplicate-listing discount and stake dilution. The challenge of securing funds for Solidigm remains, but analysts said the decision should still support SK Hynix shares because it addresses market concerns about damage to shareholder value.

Yang Hyun-kyung, an analyst at iM Securities, said on Oct. 24 that the withdrawal of Solidigm’s U.S. listing could ease concerns over SK Hynix’s duplicate-listing structure. It could also reduce caution over a discount tied to duplicate listings and dilution. Han Ji-young, an analyst at Kiwoom Securities, said SK Hynix’s disclosure that it had stopped reviewing a Solidigm IPO would help improve sentiment toward semiconductor stocks.

SK Hynix said the previous day that it would halt its review of an initial public offering for Solidigm, its indirect subsidiary. The company said it had examined various fundraising options to expand production capacity and strengthen competitiveness, but made the decision after considering capital-market conditions.

Solidigm was created after SK Hynix acquired Intel’s NAND flash and enterprise solid-state drive business in 2021 for $9 billion. The company posted losses of trillions of won after the acquisition, but its valuation has risen sharply recently as memory prices climbed with the expansion of the artificial intelligence industry. SK Hynix owns 100% of Solidigm through its U.S. intermediate holding company, AI Company. Solidigm accounts for about 12.9% of SK Hynix’s total corporate value.

Still, the company said Solidigm’s growth potential and investment needs have not changed. SK Hynix said it concluded that it needed to revisit whether an IPO at this stage was the most favorable option for SK Hynix and its existing shareholders, given recent capital-market conditions and the stock’s trading trend. The company added that existing production facilities alone would be insufficient to meet growing AI memory demand, making new production capacity in the U.S. necessary.

SK Hynix said expanding Solidigm’s production capacity and strengthening its competitiveness remain important tasks. The company said it would continue reviewing investment timing and scale, along with funding methods, while seeking ways to increase both Solidigm’s growth and the interests of existing shareholders.

SK Hynix cited capital-market conditions as the reason for shelving the listing, but the market has pointed to shareholder backlash over a duplicate listing and criticism from the financial sector as decisive factors behind the move. As the controversy continued, SK Hynix also released a statement saying it was reviewing various measures to strengthen Solidigm’s competitiveness, but that nothing had been finalized. It added that all decisions would be guided by long-term shareholder value.

Solidigm’s listing had faced duplicate-listing controversy from the early stages. Investors worried that a separate listing could deepen the discount applied to parent SK Hynix, leaving its corporate value below the value of its holdings.

SK Group’s semiconductor control structure runs from SK Inc., the holding company, to SK Square, then SK Hynix, then AI Company, an SK Hynix subsidiary, and finally Solidigm. SK Inc., SK Square and SK Hynix are all already listed, and SK Hynix is also listed in the U.S. Including Solidigm, that is why concerns have been raised about what amounts to a quadruple listing.

SK Inc. and SK Square already derive a substantial share of their earnings from SK Hynix. Those opposed to a Solidigm listing argue that if foreign investors and others shift further out of Hynix through a Solidigm IPO, it could hurt the corporate value of SK Hynix, the group’s core chip business. That is also why Lee Chan-jin, head of the Financial Supervisory Service, and Lee Eok-won, head of the Financial Services Commission, said during a recent parliamentary audit that the case could fall under duplicate-listing regulation.

On stock message boards, shareholders posted upbeat reactions about the prospect of a share-price gain. One SK Hynix shareholder said Chey Tae-won, chairman of SK Group, had made a major decision. Had the company pushed ahead with a Solidigm IPO, parent-company shareholders could have been hurt by both a duplicate-listing discount and dilution concerns. The move, the shareholder said, showed the company had squarely accepted the market’s concerns.

Another shareholder said the halt to the Solidigm listing could mark the start of a rebound in SK Hynix shares. With the duplicate-listing controversy easing and management’s commitment to boosting shareholder value now clearer, the market is due for a reassessment.

The shares responded as well. According to Epic AI, an AI-based investment information platform, SK Hynix closed regular trading up 4.42% from the previous session at 1.277 million won. The company is due to report third-quarter earnings on Oct. 28. The market also expects it to disclose the size of its shareholder return program and implementation plans that day.

Kang Kyung-ju, Hankyung.com reporter memory@hankyung.com