SK hynix delays Solidigm IPO to use internal cash for new US SSD plant

SK hynix canceled its plan to list Solidigm, its U.S.-based enterprise solid-state drive subsidiary, on the public stock market. The company announced the decision on Friday, October 23, stating that unfavorable market conditions made a listing unattractive. This move changes how the company will finance its expansion, shifting from external capital raising to internal funding strategies.

SK hynix confirmed it will still build a new fabrication plant in the United States to meet rising demand for enterprise SSDs. The company has not disclosed the size, cost, or construction timeline for the facility. It previously considered several funding routes, including a pre-IPO financing round and a full listing, which would have allowed it to bring in outside capital without adding debt.

The subsidiary focuses on high-capacity data center drives built on floating gate 3D QLC NAND memory. Demand for this technology is climbing as artificial intelligence infrastructure rollouts accelerate. Solidigm's current manufacturing capacity is insufficient to cover expected needs, making a new American plant necessary. Expanding U.S. manufacturing also aligns with the broader push for domestic production.

The company cited greater market volatility and an ongoing correction in chip stocks as the primary reasons for dropping the IPO. SK hynix believed current conditions would prevent Solidigm from earning a valuation that fairly reflects its growth outlook. It has ended its review of both a pre-IPO financing round and a listing but will continue exploring other funding methods.

Enterprise SSD demand is at a record level and is expected to rise over the next two years. Building a modern 3D NAND fab can cost tens of billions of dollars, creating a significant strain on the balance sheet. External funding could have alleviated this pressure and freed up capital for other projects.

Solidigm holds 21.1% of the enterprise SSD market and likely earns high margins similar to those reported by competitors. Micron’s enterprise storage division recently reported a non-GAAP gross margin of 90%. If Solidigm maintains such margins, the unit could generate substantial cash for future investment.

SK hynix may fund the U.S. expansion through a mix of internal cash and debt. This approach allows the parent company to retain full ownership of the subsidiary. The company prefers keeping the profitable unit wholly owned rather than selling a stake at a valuation it considers too low.