SK hynix cancels Solidigm IPO to self-fund U.S. SSD fab

SK hynix has halted its plans to take Solidigm public, a move that leaves the company to fund its own expansion in the United States. The announcement arrived early Friday, October 23, citing unfavorable stock market conditions and a recent slump in semiconductor share prices. The decision ends a review that included both a pre-IPO financing round and a full listing.

The company maintains that the shelved offering does not alter its growth strategy for its U.S.-based enterprise SSD subsidiary. SK hynix confirmed it will build a new fabrication facility in the United States to meet rising demand for high-capacity data center storage. The new plant aims to address a gap where current manufacturing capacity is barely sufficient for expected needs, particularly as AI infrastructure rollouts accelerate.

Details regarding the new facility remain sparse. The company has not disclosed the size of the plant, the total construction cost, or the timeline for the start of work. Enterprise SSD demand is currently at a record high and is expected to climb over the next two years. Building a modern 3D NAND fab typically costs tens of billions of dollars, a sum that raises questions about the strain on SK hynix's balance sheet without outside capital.

SK hynix had considered an IPO to bring in debt-free capital and to reflect what it considers the true value of Solidigm. The subsidiary, which holds a 21.1% share of the enterprise SSD market, focuses on floating gate 3D QLC NAND memory. The company believes its own market capitalization does not fully capture the value of this unit. Proceeds from a listing could have also funded dividends and share buybacks.

Market volatility and an ongoing correction in chip stocks reduced the appeal of the listing in SK hynix's view. The company stated that present conditions would prevent Solidigm from earning a valuation that matches its growth outlook. It will continue to explore other funding methods for the project while retaining full ownership of the subsidiary.

Solidigm's strong profitability may facilitate internal funding. Micron's enterprise storage division recently reported a non-GAAP gross margin of 90%. Solidigm may earn comparable or higher margins by selling exclusive products. If these margins hold for the next two to three years, the unit could generate substantial cash flow for SK hynix to invest in its U.S. expansion without selling a stake.