KB News Desk
Potential Nasdaq listing could unlock $15b in investment capacity with limited impact on SK hynix’s valuation
SK hynix’s US NAND subsidiary Solidigm could be moving closer to a Nasdaq debut, potentially giving the chipmaker a way to recover part of its $9 billion acquisition cost and raise fresh capital for expansion in the United States.
Market attention has intensified since reports emerged that Solidigm may pursue a pre-IPO funding round followed by a US listing.
SK hynix stopped short of confirming the plan last week. In an Aug. 5 regulatory filing responding to reports of a possible stake sale, the company said Solidigm was reviewing “various options” to strengthen its competitiveness but that no decision had been made.
SK hynix said it would disclose further details once they are finalized or within one month.
Solidigm was created from Intel’s NAND flash memory and solid-state drive business, which SK hynix agreed to acquire in 2020 for roughly $9 billion. The deal was intended to strengthen the Korean chipmaker’s position in the global NAND market.
A listing would allow SK hynix to bring in outside capital while retaining control of the business. It could also help fund the group’s next round of US investment without relying entirely on the parent company’s balance sheet.
In January, SK hynix committed to invest as much as $10 billion in SK hynix NAND Product Solutions, Solidigm’s parent company. Other SK Group affiliates, including SK Inc., SK Innovation and SK Telecom, have also participated in financing arrangements.
Mirae Asset Securities analyst Kim Young-gun estimated that selling part of Solidigm to outside investors could give the group about $15 billion in additional US investment capacity.
“Some investors may see this as another case of a subsidiary being separately listed, but we believe it is more appropriate to view it as a means to recover M&A investment and secure funding for subsequent investment,” Kim said in a report Tuesday.
A potential listing could nevertheless revive concerns over the parent and subsidiary trading separately, a practice often criticized for diluting the value attributable to shareholders of the parent company.
Mirae Asset argued that the impact on SK hynix would be limited because Solidigm represents a relatively small portion of the group’s overall revenue, operating profit and assets.
The brokerage said subsidiaries whose revenue, operating profit and assets each account for less than 10 percent of the parent company’s corresponding figures may pursue a US listing without seeking shareholder approval, easing some procedural hurdles.
Mirae Asset maintained its buy rating on SK hynix and its target price of 2.8 million won, saying a pre-IPO share sale and eventual Nasdaq listing would be better understood as a financing strategy for future growth than as the disposal of a key asset.
The possible Solidigm deal comes as SK hynix’s surging AI memory profits give it greater room to fund investment and increase shareholder returns at the same time.
Mirae Asset estimates that SK hynix could generate about 180 trillion won in free cash flow this year and accumulate net cash of roughly 173 trillion won.
Even after retaining about 100 trillion won as a liquidity buffer, the company could have 70 trillion won to 80 trillion won available for investment or shareholder returns, it said.
The brokerage estimated that SK hynix could return about 40 trillion won ($28 billion) to shareholders. Allocating around half of its remaining cash to shareholders would be financially manageable and could signal confidence in its future cash-generating capacity, according to Kim.
