A potential separate listing of Solidigm, the U.S. memory business acquired and developed by SK Hynix, raises concerns about ownership dilution and whether other SK Group affiliates could benefit at the expense of existing shareholders.
An AI-generated illustration representing concerns over a potential Solidigm initial public offering and its impact on SK Hynix shareholders. Graphic by Asia Today and translated by UPI
A potential initial public offering of Solidigm, the U.S. memory chip business controlled by SK Hynix, is raising concerns that approximately 3.5 million retail shareholders of the South Korean semiconductor company could see their economic interests diluted.
The controversy comes as SK Hynix shares have fallen more than 58% from their June peak amid uncertainty over the semiconductor market and reports about Solidigm's possible separate listing.
The share price, which reached 2,919,000 won ($2,192) in June, closed Tuesday at 1,223,000 won ($918).
That represents a decline of 1,696,000 won ($1,273) per share over approximately four months.
A separate listing of Solidigm could mean that new investors would share in the profits of a business whose earlier losses were reflected in SK Hynix's financial results.
At the same time, several SK Group affiliates have made direct investments in an intermediate holding company that owns Solidigm, raising questions about how any increase in the U.S. business's valuation would be distributed among shareholders.
Affiliate investments raise questions
SK Hynix acquired Intel's NAND memory business and subsequently operated it through Solidigm.
After years of losses, the business returned to profitability.
SK Inc., SK Innovation and SK Telecom then invested directly in AI Company, Solidigm's parent company.
SK Inc., in which SK Group Chairman Chey Tae-won holds a direct ownership stake, already has an indirect interest in SK Hynix through SK Square.
Its additional investment in AI Company creates a separate route through which the group holding company and Chey could benefit from any increase in Solidigm's valuation.
As of Tuesday, SK Hynix had not disclosed the valuations used by the affiliates when acquiring their stakes or how the transactions might affect the economic interests of existing SK Hynix shareholders.
The stock market has reacted negatively to reports concerning Solidigm's potential listing.
According to the Korea Exchange, SK Hynix shares dropped 10.37% to 1,495,000 won ($1,122) on Aug. 6, the day after reports emerged concerning a possible Solidigm IPO.
Following reports about the selection of an IPO underwriter on Sept. 25, the stock fell another 94,000 won ($70.57), or 5.05%, to 1,768,000 won ($1,327) on the next trading day, Sept. 28.
Retail shareholders face potential dilution
As of the end of June, SK Hynix had 3,461,526 retail shareholders holding a combined 67.98% of its outstanding shares.
The company's market valuation reflects not only its high-bandwidth memory business but also the NAND operations acquired from Intel.
At the time, SK Hynix held an effective 96.86% ownership interest in Solidigm.
Foreign media reports have suggested that Solidigm could receive a valuation of up to $150 billion and raise as much as $15 billion in an initial public offering.
Based on those estimates, new investors would acquire a 10% stake, reducing SK Hynix's effective ownership to approximately 87.17%.
The figures represent a hypothetical outcome rather than an announced transaction structure.
The controversy resembles an earlier dispute involving LG Chem and LG Energy Solution.
When LG Chem separated its battery business and listed LG Energy Solution independently, investors who had purchased shares in LG Chem to benefit from battery industry growth did not automatically receive shares in the newly listed company.
A similar structure for Solidigm could raise concerns about a valuation discount for SK Hynix if the U.S. business receives a separate market valuation without directly distributing shares to existing SK Hynix investors.
SK Hynix absorbed earlier losses
SK Hynix spent a total of $8.84 billion acquiring Intel's NAND memory business.
The U.S. NAND subsidiary recorded a net loss of 3.58 trillion won ($2.69 billion) in 2023 but returned to profitability last year with net income of 736.4 billion won ($553 million).
Losses incurred after the acquisition were reflected in SK Hynix's consolidated financial results.
Earlier this year, following the business's return to profitability, SK Hynix reorganized its existing U.S. NAND subsidiary into AI Company.
The NAND memory and solid-state drive operations were transferred to the newly established Solidigm entity.
SK Inc., SK Innovation and SK Telecom subsequently committed a combined $1.11 billion to AI Company.
Rather than purchasing additional SK Hynix shares, the affiliates chose to invest directly in the intermediate company that holds Solidigm.
That structure allows the affiliates to participate in any increase in Solidigm's value through direct ownership of AI Company, unlike ordinary SK Hynix shareholders.
Lawmakers question shareholder protections
The proposed listing drew criticism from both South Korea's ruling and opposition parties during a National Assembly Political Affairs Committee audit Monday.
Rep. Kim Hyun-jung of the ruling Democratic Party noted that Chey's indirect ownership interest in SK Hynix was approximately 1.15%, while his direct ownership stake in SK Inc. was 17.76%.
Kim argued that because affiliates in which Chey exercises greater ownership influence had invested directly in AI Company, a Solidigm listing could shift some economic benefits away from ordinary SK Hynix shareholders toward the group's controlling shareholders.
Rep. Ahn Cheol-soo of the opposition People Power Party raised similar concerns.
"This listing is not simply a case of a duplicate listing," Ahn said.
"It is a structure in which the SK Group chairman and affiliated companies take the benefits belonging to SK Hynix shareholders," he said.
Financial regulators have also concluded that a separate Solidigm listing would fall within the regulatory framework governing duplicate listings.
Lee Chan-jin, governor of the Financial Supervisory Service, told lawmakers Monday that the Financial Services Commission and his agency shared that assessment.
The dispute comes as SK Hynix's share price has fallen by more than half from its peak, while group affiliates have established separate investment channels through which they could benefit from Solidigm's future growth.
SK Hynix has yet to announce specific measures to address the potential economic impact on its existing shareholders.
"We are reviewing various measures to strengthen Solidigm's competitiveness, but nothing has been finalized at this stage," SK Hynix said.
https://www.upi.com/Top_News/World-News/2026/10/20/solidigm-ipo-sk-hynix-chey-tae-won/7911792536404/
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.