SK hynix drops Solidigm IPO

SK hynix has cancelled plans for an initial public offering of Solidigm, its U.S.-based enterprise solid-state drive subsidiary. The company announced the decision on Friday, October 23, citing unfavorable stock market conditions and a recent downward trend in semiconductor share prices.

The reversal does not halt the planned expansion. SK hynix confirmed it will build a new fabrication plant in the United States to meet rising demand for enterprise SSDs. The company has not disclosed the facility's size, total cost, or construction timeline.

Solidigm manufactures high-capacity data center drives using floating gate 3D QLC NAND memory. Demand for this storage is climbing as artificial intelligence infrastructure rollouts accelerate. Current manufacturing capacity is barely sufficient to cover expected needs, making a new American plant a priority for the group.

SK hynix evaluated several financing routes, including direct investment, a pre-IPO funding round, and a full listing. The company stated that greater market volatility and an ongoing correction in chip stocks reduced the appeal of going public. It concluded that present conditions would prevent Solidigm from earning a valuation that fairly reflects its growth outlook.

The decision to self-fund is supported by the subsidiary's strong profitability. Solidigm holds a 21.1% share of the enterprise SSD market. Micron, a competitor, recently reported a 90% non-GAAP gross margin for its enterprise storage division. SK hynix believes Solidigm may earn similar or higher margins by selling exclusive products, allowing the unit to generate substantial cash flow.

Enterprise SSD demand is at a record level and is expected to rise over the next two years. A modern 3D NAND fab typically costs tens of billions of dollars. While outside funding could have eased balance sheet strain, SK hynix opted to retain full ownership of the profitable subsidiary rather than sell a stake at what it considers a low valuation.