SK Hynix puts US IPO of chip unit Solidigm on hold after Seoul authorities raise concerns

By Heekyong Yang, Hyunjoo Jin and Joyce Lee

SEOUL, Oct 23 (Reuters) – SK Hynix on Friday put on hold a planned US listing for its Solidigm chip unit due to market volatility — a move which also comes after South Korean authorities raised concerns that the deal could undermine shareholder interests.

A listing of Solidigm, a former Intel business that specialises in NAND flash memory and solid-state drives, had been under consideration to help fund a new US factory and meet surging demand for chips in AI data centres.

It could also have funded share cancellations and buybacks, SK Hynix said in a statement.

People familiar with the now-suspended IPO plans had said that the share sale could have raised $15 billion and valued the unit at $150 billion.

The South Korean chip giant, which became dual-listed with a debut on the Nasdaq in July, said it plans to continue to explore ways to fund Solidigm’s expansion and enhance shareholder value, including reviewing the timing, scale and financing of future investments.

“This decision does not reflect any change in Solidigm’s growth prospects or investment needs,” it said.

Shares in SK Hynix finished 4.4% higher, outperforming a flat broader market as worries that a Solidigm IPO could dilute SK Hynix shareholders’ interests abated.

SOUTH KOREAN CHIPMAKERS UNDER PRESSURE TO INVEST IN US

It was not immediately clear how the decision would be received by the Trump administration, which has put pressure on foreign chipmakers to build new facilities in the US and which has been holding discussions with SK Hynix.

According to people familiar with the matter, SK Hynix has sought to use the prospect of a potential factory in the US as a bargaining chip, linking it to hoped-for approval from Washington that would allow US chipmaking equipment to be exported to China to increase its production there.

South Korean authorities have said they are discussing semiconductor investments in the US with Washington as part of broader bilateral talks, but they are not part of negotiations about a $350-billion investment commitment South Korea made to the US last year in exchange for lower US tariffs.

On one hand, SK Hynix’s decision to hit the pause button on the Solidigm IPO reflects a sharp pullback in sentiment towards AI-sector stocks as investors fret over the implications of rising borrowing costs for the debt-heavy sector.

Other deals that have been shelved include the IPO of Australia’s Firmus, which is backed by Nvidia and a Singapore REIT listing for Blackstone-backed AirTrunk.

At the same time, South Korean concerns about overseas listings have mounted.

Financial Supervisory Service Governor Lee Chan-jin told a parliamentary hearing this week that regulators were examining whether Solidigm’s potential US IPO would require a review under the country’s dual-listing restrictions, which were tightened in July to strengthen shareholder protections.

The Korea Corporate Governance Forum, an independent body, welcomed SK Hynix’s decision.

Instead of a US listing for Solidigm, SK Hynix, which has made massive earnings gains on the AI boom, could inject capital through its AI Company entity, even if Solidigm requires tens of trillions of won in capital expenditure, it said.

Citing average estimates from South Korean brokerages, it said SK Hynix’s cash holdings were projected to reach 456 trillion won ($344 billion) by the end of 2027.

The debate over listings of overseas units has also extended beyond the chip sector. South Korean auto parts maker Myoung Shin Industrial said this week that its board had decided to oppose a proposed US listing of a subsidiary, citing the need to review shareholder protection measures. Its shares jumped 18% following the announcement.

Similar plans by other South Korean companies could face greater scrutiny, said Shin Yoon-chul, an analyst at Kiwoom Securities.

($1 = 1,326.0300 won)

(Reporting by Heekyong Yang, Hyunjoo Jin and Joyce Lee; Editing by Edwina Gibbs)