SK hynix Scraps Solidigm Share Sale to Finance U.S. Chip Plant

SK hynix said on Friday, October 23, that it has ended its review of an initial public offering for Solidigm, the enterprise SSD subsidiary it owns in full, and will not pursue a pre-IPO funding round. The company cited market volatility and an ongoing correction in chip stocks as the reasons for the reversal.

The decision leaves the manufacturer to finance a new fabrication plant in the United States on its own balance sheet. SK hynix confirmed it still intends to build the facility to meet rising demand for data center storage but has not disclosed its size, construction cost, or start date.

The company had weighed direct investment, a funding round, and a public listing as ways to pay for the expansion. An offering would have brought in outside capital without adding debt. SK hynix has now closed that option, though it continues to review other funding sources.

Solidigm produces high-capacity drives for data centers based on floating gate 3D QLC NAND memory. The unit and its parent together hold 21.1% of the enterprise SSD market. SK hynix said its current manufacturing capacity is barely sufficient to cover projected requirements as AI infrastructure builds out.

Micron's enterprise storage division recently reported a non-GAAP gross margin of 90%. SK hynix believes Solidigm may earn comparable or higher returns on exclusive products, which would generate cash for the parent company's consolidated profits over the next two to three years.

Modern 3D NAND plants cost tens of billions of dollars to build. Funding the project through cash reserves and borrowing would allow SK hynix to retain full ownership of the subsidiary rather than sell a stake at a valuation it considers too low.

SK hynix ended the listing review after judging that current market conditions would prevent a valuation reflecting Solidigm's growth outlook.