SK hynix shelved Solidigm listing to build U.S. storage plant

SK hynix announced early Friday that it will not move forward with an initial public offering for its U.S. subsidiary, Solidigm.

The company stated that unfavorable stock market conditions and recent trends in semiconductor share prices made a listing unattractive. This decision comes despite the unit's role in producing high-capacity data center SSDs based on floating gate 3D QLC NAND memory. Demand for this storage technology is rising as AI infrastructure deployments accelerate, leaving Solidigm's current manufacturing capacity barely sufficient to meet projected needs.

SK hynix confirmed it still intends to construct a new fabrication plant in the United States. The company has not specified the size of the facility, the total construction cost, or when work will begin. Previously, management considered several funding methods, including direct investment, a pre-IPO financing round, and a full share listing. An offering would have provided outside capital without increasing debt and could have signaled the subsidiary's true value, which SK hynix argues is not fully reflected in its own market capitalization.

The parent company noted that increased market volatility and a correction in chip stocks reduced the appeal of going public. It believes current conditions would prevent Solidigm from achieving a valuation that matches its growth outlook. Consequently, SK hynix ended its review of both the pre-IPO round and the listing, though it continues to explore other funding options.

The move raises questions about the financing structure, given that enterprise SSD demand is at a record high and a modern 3D NAND fab can cost tens of billions of dollars. Outside funding would have alleviated strain on SK hynix's balance sheet, freeing up capital for other projects. However, Solidigm's profitability may make internal funding viable. Micron's enterprise storage division recently reported a non-GAAP gross margin of 90%. Solidigm, which holds 21.1% of the enterprise SSD market, may earn even higher margins through exclusive product sales.

If such margins persist for the next two to three years, the unit could significantly boost SK hynix's consolidated profits and generate cash for future investments. The company might fund the U.S. expansion using a mix of internal cash and debt while retaining full ownership. Paying entirely in cash remains possible but less likely given the capital intensity of advanced chip plants. SK hynix appears willing to forgo a potentially low-valuation sale to keep the profitable subsidiary wholly owned.