Key Takeaways
- SK hynix shares rose 4% today after the company dropped plans for a US IPO of its Solidigm flash-memory unit. The IPO could have raised about $10 billion.
- Dropping the listing is a win for SK hynix shareholders. They keep all of Solidigm, and they avoid a listing that Korea’s regulators saw as a threat to minority investors.
- Without IPO money, Solidigm’s expansion has to be paid for out of SK hynix’s own cash, the same cash that funds its buybacks.
- SK hynix plans to give its payout plans with its third-quarter results on Oct. 28.
SK hynix (SKHY) rose 4% this morning after it dropped plans for a US listing of Solidigm, its flash-memory unit. The listing could have raised about $10 billion.
Bloomberg broke the news at 6:38 p.m. ET Thursday, and SK hynix confirmed it in a filing minutes later. Solidigm has stopped work on its pre-IPO fundraising and on the IPO itself. (Other memory stocks bounced after Thursday’s sell-off too, though by less.)
Regulators weren’t having it
SK hynix’s filing points to capital market conditions. But shareholders and regulators reportedly pushed back hard. Regulators worried the offering could amount to a “duplicate listing” that diluted existing shareholders.
Financial Supervisory Service Governor Lee Chan-jin told lawmakers earlier this week that his agency and the Financial Services Commission both saw Solidigm as falling under Korea’s limits on duplicate listings. The fight had become a test of Seoul’s push to shrink the “Korea discount,” the long-running undervaluation of the country’s stocks.
For SK hynix shareholders, that’s a good result. They keep all of Solidigm. A listing reportedly could have valued it at up to $100 billion, about a seventh of SK hynix’s market value.
And the market isn’t paying much for any of it. SK hynix traded at 3.0x forward earnings at Thursday’s close. That’s its lowest since its US listing in July and well below its 4.0x average…
That’s a stock priced for a peak, with Wall Street still expecting revenue to top out within a few years.
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Solidigm’s growth now competes with buybacks
SK hynix says Solidigm still needs the same investment. Without IPO money, that expansion comes out of SK hynix’s own cash. Capital spending already took about half of the 53.4 trillion won the company made from operations in 2025…
(In 2022 and 2023, capital spending ran ahead of operating cash.)
Shareholders were already promised plenty of that cash. In August, the board approved a 40 trillion won buyback, which is more than all the cash left after capital spending in 2025. It also raised its target for shareholder returns to over 50% of cumulative free cash flow through 2027.
A good trade for shareholders
My take: dropping the IPO is the right call. In a strong year, SK hynix makes enough cash to fund Solidigm and keep buying back stock, and at about 3x forward earnings, every share it retires comes cheap. The risk is a downturn like 2023’s, when capital spending was almost double the cash from operations.
SK hynix plans to give its payout plans with its third-quarter results on Oct. 28. That’s when we’ll see how it splits the cash between Solidigm and shareholders.
So what is SK hynix stock actually worth?
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