A potential US listing of Solidigm could give SK hynix’s NAND flash and SSD subsidiary fresh capital for expansion, while raising questions about how the deal would balance funding needs with returns for existing shareholders.
Reuters reported Friday that Solidigm had held pitch meetings with investment banks for an initial public offering that could take place as early as next year, valuing the company at up to $150 billion and raising about $15 billion. Discussions remain in an early stage.
“Solidigm is reviewing various options to strengthen its business competitiveness, but no specific plans have been confirmed at this time,” an SK hynix official said.
The prospect has drawn differing views over both the rationale for raising capital and the implications of adding another listed company to SK Group’s ownership structure.
SK Inc. controls SK Square, which controls SK hynix. Solidigm sits beneath SK hynix’s US-based AI Company. With SK Inc., SK Square and SK hynix already listed, a Solidigm IPO would create a fourth publicly traded company within the five-layer chain.
The Korea Corporate Governance Forum has described the arrangement as a “five-tier duplicate listing,” arguing that SK should address its existing multilayered listings before pursuing another.
Others see an important distinction from the domestic carve-out listings that have attracted criticism. Solidigm grew out of Intel’s NAND and solid-state drive business, which SK hynix agreed to acquire for about $9 billion in 2020, rather than an internally developed business spun off for listing.
Mirae Asset Securities analyst Kim Young-gun said an IPO should be viewed as “recovering mergers and acquisitions investment and securing funds for follow-on investment.” He said a partial stake sale would have a limited impact on SK hynix’s valuation.
Potential US expansion adds to the funding rationale. Solidigm is considering building a NAND plant in the US, with upstate New York among the possible sites, Reuters reported earlier this month.
For SK hynix shareholders, the implications would depend on the deal’s structure and how the proceeds are used.
A listing would not by itself remove Solidigm from SK hynix’s consolidated accounts, provided the parent retains control. Issuing new shares to outside investors would, however, reduce SK hynix’s effective ownership, giving minority shareholders a larger claim on Solidigm’s future earnings and cash flow.
yeeun@heraldcorp.com
