South Korean chip manufacturer SK Hynix saw its stock price fall by 3% in Seoul on Friday morning after it halted the evaluation of its subsidiary Solidigm's potential initial public offering (IPO) in the United States.
The company stated in its announcement that, after evaluating the recent capital market conditions and stock price trends, “Solidigm will cease assessing potential Pre-IPO and IPO options.” The announcement also mentioned that, amid the growing memory demands for AI, the company is exploring various financing options to fund a new semiconductor wafer factory in the United States.
This chip manufacturer stated that IPO could have potentially helped to finance the expansion of Solidigm, while also providing greater financial flexibility for shareholder returns, including dividends, stock repurchases, and share cancellations.
However, the company stated that increased volatility in financial markets has led to a broader correction in semiconductor stocks, which has prompted SK Hynix to re-evaluate whether IPO will benefit existing shareholders.
The company also stated that the existing production capacity of Solidigm is limited, making it difficult to meet the continuously rising memory demands driven by AI. This highlights the necessity of increasing manufacturing capacity in the United States.
This decision also came after regulatory reviews in South Korea.
According to Reuters, South Korean financial regulators stated on Monday that if Solidigm goes public in the United States, it may violate South Korea's regulations regarding dual listings.
The chairman of the Financial Services Commission of South Korea, Lee Chan - jin, stated that the regulatory authorities are reviewing whether this IPO needs to be audited in accordance with South Korea's regulations aimed at protecting minority shareholders.
Hynix stated that the investment needs of Solidigm have not changed, and the company will continue to explore other financing options to support the growth of this subsidiary and enhance shareholder value.
At the time of this announcement, U.S. tech stocks were under pressure due to market concerns regarding AI spending. The Nasdaq Composite Index, which is dominated by tech stocks, fell 2.6% on Thursday, recording its worst single-day performance since June; NVIDIA declined by 4.4%, and Supermicro Semiconductor dropped by 8.1%.
As memory stocks faced selling pressure, NVIDIA CEO Jensen Huang stated on Thursday that despite market concerns about weakening demand, he expects there to be no oversupply of memory chips by 2029.
As concerns about financing risks and the expansion speed of AI's infrastructure intensify, stocks related to AI data centers are also under pressure. The stock price of CoreWeave plummeted by 10% on Thursday, with the monthly decline expanding to 36%; Australia's NextDC saw a nearly 40% drop on Wednesday after its profit forecasts were lowered.
