By Heekyong Yang, Hyunjoo Jin and Joyce Lee
SEOUL, Oct 23 (Reuters) - South Korean chipmaker SK Hynix said on Friday that it had suspended its review of a US initial public offering for its Solidigm subsidiary, citing financial market volatility and share price trends.
South Korea's financial regulator said earlier this week that the listing could run afoul of the country's dual-listing restrictions, which were tightened in July to strengthen shareholder protection.
SK Hynix said in a statement it would
continue to explore ways to fund Solidigm's expansion and enhance shareholder value, including reviewing the timing, scale and financing of future investments.
"This decision does not reflect any change in Solidigm's growth prospects or investment needs," the company said.
The move brings an end, at least for now, to a potential fundraising option that Reuters reported could raise as much as $15 billion, highlighting the challenge of balancing investment needs driven by booming AI-related memory demand with growing concerns in South Korea over the impact of subsidiary listings on existing shareholders.
Despite strong business performance at both SK Hynix and Solidigm, the company said increased market volatility and a broader correction in semiconductor stocks had prompted it to reconsider the listing.
Shares in SK Hynix have fallen more than 30% since the potential Solidigm IPO was reported in late September, compared with a 20% decline in South Korea's benchmark KOSPI index over the same period.
The announcement could, however, help improve investor sentiment towards semiconductor stocks, said Han Ji-young, an analyst at Kiwoom Securities. Concerns over Meta's creditworthiness, a selloff in US AI stocks and pressure from oil prices had repeatedly weighed on markets, eroding investor confidence, he added.
GROWING SCRUTINY OVER DUAL LISTINGS
The decision also follows heightened regulatory scrutiny of the proposed listing. Financial Supervisory Service Governor Lee Chan-jin told a parliamentary hearing earlier this week that regulators were examining whether Solidigm's potential US initial public offering would require a review under domestic rules.
Solidigm, based in Rancho Cordova, California, is SK Hynix's US subsidiary specialising in NAND flash memory and solid-state drives.
SK Hynix had considered an IPO as one of several ways to finance Solidigm's expansion amid growing demand for memory chips driven by artificial intelligence.
The company said raising external capital through a listing could have boosted its cash flow, helping fund new production facilities while supporting shareholder returns through dividends, share buybacks and share cancellations.
It added that an IPO could have helped investors better recognise Solidigm's growth potential, which it said was not fully reflected in the parent company's valuation.
Shares of SK Hynix were down 1.3% in morning trade, compared with a 2.3% decline in the benchmark KOSPI.
(Reporting by Heekyong Yang, Hyunjoo Jin and Joyce Lee; Editing by Chris Reese and Cynthia Osterman)
