PiCK
SK Hynix Falls Below 1.2 Million Won Despite Halting Solidigm Listing Review
Summary
- SK Hynix said it had halted a review of a Solidigm listing, but its stock price remained weak at 1.194 million won.
- The company said demand for SK Hynix shares was pressured as AI-related stocks and semiconductor shares plunged in the U.S. market, hurting investor sentiment.
- SK Hynix said that despite suspending Solidigm's IPO, it still sees a need for investment in new U.S. production facilities to meet AI memory demand.
Forecast Trend Report by Period
Down 2.37% in premarket to 1.194 million won
U.S. chip-stock plunge dents investor sentiment
SK Hynix shares failed to rebound even after the company halted a review of a U.S. listing for Solidigm. Relief over concerns that a separate listing could hurt shareholder value was overshadowed by fresh anxiety over U.S.-led investment in artificial intelligence.
As of 8:10 a.m. on Oct. 23, SK Hynix was trading at 1.194 million won in NXT premarket trading, down 2.37% from the previous day. The stock extended its weakness after falling 5.49% in the regular session a day earlier.
The decline appeared to reflect a broad overnight selloff in AI-related shares on Wall Street. On Oct. 22, the Nasdaq Composite dropped 2.60% and the Philadelphia Semiconductor Index sank 6.7%. Doubts spread across the chip sector over whether massive spending on AI infrastructure will deliver adequate returns.
Meta's earnings deepened those concerns. Third-quarter revenue rose 26% from a year earlier, but free cash flow showed a $2.12 billion deficit. The company also raised the lower end of its projected capital spending for this year. Investors focused less on revenue growth than on rising investment costs and the pace of cash burn.
Caution also spread to credit markets. Meta's five-year credit-default swap premium rose to 114.79 basis points, the highest level on record. A CDS is a form of insurance against default, and a higher premium means the cost of assuming credit risk has increased.
Against that backdrop, SK Hynix said in a filing before the market opened on Oct. 23 that it would halt its review of a pre-IPO fundraising round and an initial public offering for Solidigm, its U.S. sub-subsidiary. The company had examined multiple funding options to expand production capacity and strengthen competitiveness, but decided to stop the process after considering capital-market conditions.
The proposed Solidigm listing had faced opposition from existing SK Hynix shareholders, who argued it could damage their interests. The concern was that a separately listed affiliate in charge of a core business could weigh on the parent company's valuation and require it to share profits with outside shareholders.
South Korea's financial authorities have also called for shareholder protection. Kim Byoung-hwan, chairman of the Financial Services Commission, said at a comprehensive parliamentary audit by the National Assembly's Political Affairs Committee on Oct. 22 that an overseas listing by Solidigm would also be subject to duplicate-listing guidelines. Lee Bok-hyun, governor of the Financial Supervisory Service, took the same position during a parliamentary audit on Oct. 19.
Solidigm was created after SK Hynix acquired Intel's NAND flash and solid-state drive business in 2021. SK Hynix currently owns 100% of the company through its U.S. intermediate holding company, AI Company.
Separate from its decision to halt the listing review, SK Hynix said its view on Solidigm's growth prospects and the need for additional investment remains unchanged. The company maintains that new production facilities in the U.S. are needed to meet demand for AI memory. It plans to reconsider its funding options while continuing to expand its manufacturing base.
