SK Hynix has withdrawn the NASDAQ IPO (initial public offering) of Solidigm, its U.S. NAND semiconductor grand-subsidiary. Concerns over shareholder value erosion due to duplicate listings have been temporarily resolved. Given that Solidigm's duplicate listing was cited as one of the reasons for SK Hynix's recent sharp stock price decline, this move is expected to positively impact investor sentiment. As SK Hynix plans to disclose additional shareholder return measures on the 28th, an improvement in the stock price driven by enhanced shareholder value is also anticipated.
On the 23rd, SK Hynix announced that it would halt its review of Solidigm's pre-IPO and IPO. While stating that "its assessment of Solidigm's growth potential or investment necessity has not changed," SK Hynix explained the reason for withdrawing the listing by saying, "there is a need to re-examine whether an IPO at this time is the most favorable option for SK Hynix and existing shareholders."
Solidigm sits at the bottom of the corporate governance structure that runs as follows: "SK → SK Square → SK Hynix → U.S. intermediate holding company AI Company → Solidigm." Consequently, it was pointed out that if Solidigm were to list, a "five-tier duplicate listing" structure would be formed, even excluding American Depositary Receipts (ADRs).
Amid this structure, news of the review for listing its grand-subsidiary Solidigm left SK Hynix's stock price unable to escape sluggishness. From the 1st to the 22nd, Samsung Electronics' stock price fell by 22.64%, while SK Hynix dropped by 33.28%. Although Samsung Electronics ended its share buyback on the 6th and faced a supply-demand gap earlier than SK Hynix, SK Hynix's stock price fell more sharply. SK Hynix had conducted a 4 trillion won scale share buyback from August 20 to the 21st. Despite common negative factors such as deteriorating investor sentiment over AI profitability concerns and adjustments across the semiconductor sector, SK Hynix's decline was particularly steep. Analysts attributed this to the deterioration of investor psychology caused by the controversy over Solidigm's duplicate listing.
The industry expects that the suspension of Solidigm's listing will have a positive effect on SK Hynix's stock price, which had been in a sharp decline recently. This is because with the IPO halted, existing SK Hynix shareholders can fully secure the benefits from Solidigm's growth in the AI data center eSSD market. This is positive for improving investor sentiment, especially given that the supply-demand entity defending the stock price has disappeared following the end of the share buyback on the 21st.
Indeed, after the announcement of the suspension of Solidigm's IPO, SK Hynix's stock price rebounded. On this day, SK Hynix closed trading at 1.277 million won, up 54,000 won (4.42%) from the previous trading day. This contrasts with the sharp drop in domestic AI and semiconductor stocks following a plunge in U.S. stock markets overnight centered on AI-related shares. Samsung Electronics was weak throughout the day but fluctuated around flat levels just before the close of regular trading, finishing at 215,500 won, up 1,000 won (0.47%) from the previous trading day.
Kim Sun-woo, a researcher at Meritz Securities, stated, "The withdrawal of Solidigm's IPO has drawn attention to SK Hynix's strong will regarding shareholder returns," adding, "This is expected to drive an effective stock price rebound in conjunction with a valuation approaching historical lows and the strengthened shareholder return measures that will be detailed in the Q3 earnings announcement on the 28th."
It is also significant that SK Hynix made a decision prioritizing the protection of existing shareholders, given that financial authorities and the political sector have strongly pointed out the issue of duplicate listings. The government has, in principle, prohibited duplicate listings to resolve the Korea Discount and released guidelines for exceptions to duplicate listings in July. These guidelines stipulate that listing subsidiaries on overseas stock exchanges should be subject to the same rules as domestic duplicate listings, including the board of directors' duty of loyalty to shareholders. Lee Eui-woon, Chairman of the Financial Services Commission, also stated at the National Assembly's Political Affairs Committee national audit on the 22nd that "Solidigm's U.S. listing is a duplicate listing" and that it falls under the scope of the guidelines.
However, securing investment funds due to the IPO suspension remains a task to be resolved in the future. SK Hynix believes it needs to expand Solidigm's production capacity within the U.S. to respond to surging AI memory demand. The initial consideration of an IPO was based on the plan to reduce direct financial burden by raising external investment funds and securing room for shareholder returns such as dividends, share buybacks, and cancellations. Yang Hyun-kyung, a researcher at iM Securities, said, "There is a situation where opportunities for external capital raising have decreased and the burden of future investment funds may increase."
Some analysts also suggest that since SK Hynix's performance has grown significantly, it can easily secure investment resources. According to Mirae Asset Securities, SK Hynix's FCF (free cash flow) this year is expected to reach 180 trillion won, and SK Securities analyzed that the 2027 FCF will exceed 260 trillion won. Lee Min-hee, a researcher at BNK Investment & Securities, stated, "SK Hynix holds abundant cash," adding, "It appears they tried to raise funds cheaply by leveraging the memory boom in a situation where CXMT and Kioxia are moving to expand their capital."
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