Following news that SK Hynix has suspended its review of an initial public offering (IPO) for its U.S. grand-subsidiary, Solidigm, the securities industry is responding with a sense of relief. With concerns over excessive investment in artificial intelligence (AI) emerging and global investor sentiment weakening, analysts assess that one layer of burden on individual stock prices has been lifted.
Choi Bo-young, a researcher at Kyobo Securities, told Money Today on the 23rd, "There was an aspect where domestic and foreign institutional investors hesitated to buy SK Hynix due to the Solidigm IPO issue," adding, "It is positive for SK Hynix as it allows for greater focus on earnings."
SK Hynix's all-time high was reached on June 22 (closing price of 2.919 million won). Rumors of a Solidigm IPO emerged after the market close on August 5, following the domestic stock market's sharp rebound (July 31) and rising concerns over capacity expansion by China's Changxin Memory Technologies (CXMT), triggering a plunge of over 10% the next day. The issue was cited as a negative factor throughout the second half of the year.
The interpretation that the Solidigm IPO posed an investment burden gained traction as foreign outflows accelerated. This is because foreigners have shown relatively sensitive movements regarding corporate governance structures in the past. According to Korea Exchange statistics, the net selling amount by foreigners in SK Hynix accumulated up to the previous day since the IPO rumors surfaced reached 25.982 trillion won.
As SK Hynix dispels the dual listing controversy, market attention turns to the third-quarter preliminary earnings release scheduled for the 28th. With the share buyback ending on the 21st, whether the company will present additional shareholder return measures to restore stock price elasticity has become a topic of discussion.
Kim Sun-woo, a researcher at Meritz Securities, stated, "SK Hynix explained that it actively considered the Solidigm IPO plan as a measure to enhance shareholder value, which could also lead to a re-evaluation of the corporate valuation of the parent company, SK Hynix," adding, "We note SK Hynix's strong will for shareholder return through this explanation."
He continued, "There is a high possibility that a return plan exceeding existing expectations will be presented," and added, "The withdrawal of the Solidigm IPO would have further highlighted the importance of returns directly attributable to existing shareholders. If valuation near historical lows combines with strengthened return measures, it will drive an effective stock price rebound."
Some voices also express concern that, amid a global semiconductor shortage where the strategic value of NAND is being emphasized, the company can no longer raise capital for fab expansion with less repayment burden. Solidigm was launched after SK Hynix acquired Intel's NAND business and has expanded its business centered on solid-state drives (SSDs) for data centers.
Yang Hyun-kyung, a researcher at iM Securities, stated, "As this decision accepts concerns over shareholder value erosion, wariness regarding discounts from dual listings and share dilution may be alleviated," while adding, "It is also a situation where opportunities for external capital raising have decreased and the burden of future investment funds may increase."
Lee Min-hee, a researcher at BNK Investment & Securities, said, "SK Hynix currently holds abundant cash," and added, "In a situation where Changxin Memory Technologies (CXMT), Kioxia, and others are moving to secure capital, it appears they tried to raise funds cheaply by leveraging the memory boom. Demand momentum peaked in the second quarter."
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