SK hynix cancels Solidigm IPO to fund new US plant with internal cash

SK hynix has decided to keep its US storage unit private, canceling plans for an initial public offering of Solidigm. The company announced the change early Friday, October 23, stating that volatile market conditions and falling semiconductor share prices made a stock listing unappealing at this time.

Despite the cancellation, SK hynix confirmed it will proceed with building a new fabrication plant in the United States. The facility is designed to meet rising demand for enterprise solid-state drives, particularly those powered by artificial intelligence infrastructure. The company has not yet disclosed the specific size, cost, or construction timeline for the new site.

The decision changes how the expansion will be paid for. SK hynix previously considered several funding routes, including direct investment, a pre-IPO funding round, and a full public listing. An offering would have allowed the company to raise capital from outside investors without taking on debt. It also would have allowed the firm to set a market price for Solidigm that it believes is higher than the value reflected in its current market capitalization.

SK hynix now plans to use internal cash to fund the project, though it said it will continue to explore other financing options. The company noted that current market volatility would prevent Solidigm from earning a valuation that fairly reflects its growth outlook. By ending the review of both the pre-IPO round and the listing, SK hynix retains full ownership of the subsidiary.

Solidigm specializes in high-capacity data center drives built on floating gate 3D QLC NAND memory. The unit holds 21.1% of the global enterprise SSD market alongside its parent company. Demand for these products is at a record high, and current manufacturing capacity is nearly exhausted. A new American plant would also expand SK hynix's domestic manufacturing footprint, a factor that carries weight in current US industry policy.

The move aligns with strong profitability trends in the sector. Micron's enterprise storage division recently reported a non-GAAP gross margin of 90%. Solidigm may achieve similar or higher margins by selling exclusive products. If these profit levels hold, the unit could generate substantial cash flow to support future investments without requiring outside ownership stakes.

Building a modern 3D NAND factory typically costs tens of billions of dollars. While external funding could have reduced the strain on SK hynix's balance sheet, the company opted to keep the subsidiary fully in-house. The parent company believes the long-term value of retaining ownership outweighs the short-term benefits of raising capital through a stock market that it currently views as unstable.