SK Hynix's American depositary receipts (ADRs) plummeted by as much as 10% to $139.01, falling below their July 9 IPO price of $149. This decline was triggered by news that its US subsidiary, Solidigm, is exploring an initial public offering as early as next year, potentially valuing the unit at up to $150 billion. The potential IPO for Solidigm could also include raising $15 billion.
The prospect of a Solidigm IPO has sparked debate among analysts regarding its impact on SK Hynix's valuation. Some analysts believe that a separate listing would dilute the economic ownership of existing SK Hynix shareholders, as profits and cash flows from Solidigm would need to be shared with new investors. This could also lengthen the path for cash to reach SK Hynix shareholders, as funds would first remain with Solidigm before potentially being transferred to the parent company through dividends or other capital transactions.
Conversely, other analysts, like those at Mirae Asset Securities, view a Solidigm stake sale more positively, suggesting it could help recoup merger and acquisition investments and secure resources for future investments. They estimate such a move could generate roughly $15 billion in US investment capacity for SK Hynix. Despite this, some market observers have questioned the timing of a Solidigm IPO, especially after SK Hynix recently raised substantial funds through ADRs, suggesting the company is not in urgent need of capital. The move is seen by some as a way for SK Group to deploy SK Hynix's capital across the broader group.
SK Hynix had previously addressed speculation on August 5, stating it was reviewing options to enhance Solidigm's competitiveness but that nothing had been finalized. However, its share price still tumbled 10.37% the following day. The company is reportedly restructuring Solidigm into a US "AI company," with the NAND flash business transferred to a newly created subsidiary also named Solidigm. Investors are reportedly frustrated, viewing the potential IPO as creating market noise without a compelling reason, especially given recent dilution concerns from its own ADR issuance.
