SK hynix cancels Solidigm listing to self-fund U.S. storage plant

Semiconductor markets have seen recent volatility in chip stocks, which has influenced corporate funding strategies for major manufacturers.

SK hynix announced on Friday, October 23, that it will not pursue an initial public offering for Solidigm, its U.S.-based subsidiary for enterprise solid-state drives. The company stated that current stock market conditions and declining semiconductor share prices made a listing unattractive at this time.

SK hynix confirmed that the decision does not alter its plans to build a new fabrication plant in the United States. The facility is intended to meet rising demand for high-capacity data center SSDs driven by AI infrastructure expansion. The company has not yet disclosed the specific location, total cost, or construction timeline for the new site.

Solidigm produces storage devices using floating gate 3D QLC NAND memory. The subsidiary currently operates with limited manufacturing capacity that is barely sufficient to cover expected demand. A new American plant would expand SK hynix's domestic manufacturing footprint, a move that aligns with industry trends toward U.S. production.

To finance this expansion, SK hynix evaluated several funding routes, including direct investment, a pre-IPO funding round, and a full public listing. The company previously considered that an offering would allow it to raise outside capital without increasing debt while potentially highlighting the subsidiary's value, which it believes is not fully reflected in SK hynix's current market capitalization.

The company cited greater market volatility and an ongoing correction in chip stocks as the primary reasons for ending its review of the listing. SK hynix concluded that present conditions would prevent Solidigm from achieving a valuation that fairly reflects its growth outlook. It will continue to explore other funding methods, including internal cash and debt, while retaining full ownership of the subsidiary.

Solidigm holds 21.1% of the enterprise SSD market alongside its parent company. Industry comparisons suggest high profitability in this sector, with Micron's enterprise storage division reporting a non-GAAP gross margin of 90% recently. SK hynix may rely on these strong margins to generate the cash needed for the new U.S. facility without diluting its ownership stake.