[Edaily Marketin JI YEONG-EUI Reporter] SK Hynix has suspended its review of an initial public offering (IPO) for its U.S. subsidiary Solidigm, putting the brakes on plans for external fundraising that had been estimated at up to 20 trillion won. Since the need to secure new production facilities in the U.S. to meet demand for NAND flash memory used in artificial intelligence (AI) data centers remains unchanged, securing alternative funding has emerged as a key challenge. With the possibility of a massive 16 trillion won special dividend also being raised, attention is focusing on the company’s funding strategy to balance capital expenditures with shareholder returns.

IPO Suspension Puts Brakes on 20 Trillion Won Funding Plan… What Are the Alternatives?

According to investment banking (IB) industry sources on the 26th, SK Hynix announced on the 23rd that it was suspending its review of

plans to

secure pre-IPO funding for Solidigm and pursue an initial public offering (IPO) on the U.S. Nasdaq. This comes approximately two and a half months after news of the listing plans first surfaced on August 5. The company stated that, considering capital market conditions and stock price trends, it needed to reevaluate whether an IPO was the most advantageous option for existing shareholders.

Solidigm is a U.S. company established when SK Hynix acquired Intel’s NAND business in 2021. Demand for its flagship product, the enterprise solid-state drive (eSSD), is growing as investment in AI data centers expands. Accordingly, Solidigm has reportedly been considering plans to build a new NAND production facility in New York State. This is interpreted as a strategy to reduce dependence on its Dalian, China, plant and to counter capacity expansion efforts by competitors such as China’s Yangtze Memory Technology (YMTC) and Japan’s Kioxia.

Initial market forecasts valued Solidigm’s enterprise value at between $100 billion and $150 billion. Estimates also suggested that the company could raise between $10 billion and $15 billion (up to approximately 20 trillion won) through an IPO. The plan was to expand production capacity using external funding while simultaneously alleviating the financial burden of investing in cutting-edge memory technologies, such as High Bandwidth Memory (HBM), which SK Hynix is pursuing.

However, the situation changed as concerns grew that a separate listing would erode the value for existing shareholders. Critics point out that adding another listed company to the multi-layered ownership structure—which extends from SK through SK Square, SK Hynix, and a U.S.-based AI company to Solidigm—could reduce the economic benefits returned to shareholders of the parent company. Political circles and financial authorities also raised concerns about the issue of duplicate listings.

With the listing plan shelved, the company must now reevaluate its options for securing investment funds. In the market, alternatives being discussed include attracting external investors such as global private equity funds (PEFs), private loans, a third-party private placement, and direct investment or loans from SK Hynix.

External equity investment can reduce the debt burden but may lower the stake held by existing shareholders. On the other hand, utilizing debt, such as private loans, can avoid equity dilution but comes with the burden of interest and principal repayments. If SK Hynix injects funds directly, it would not have to share future profits with external investors, but this would increase the parent company’s cash burden.

There are also examples of capital increases targeting external investors. Last year, SK On pursued a third-party private placement worth 2 trillion won to improve its financial structure. If Solidigm builds a new factory in the U.S., there is also potential to leverage local government support. Earlier, foreign media reported that New York State had reportedly offered large-scale tax incentives to attract the factory.

Special Dividends as Another Variable… Balancing Investment and Shareholder Returns

The trend toward expanding shareholder returns has also emerged as a variable in future funding strategies. On the same day, reports emerged that SK Hynix is considering paying out approximately 16 trillion won—80% of the roughly 20 trillion won in capital gains from the sale of its stake in Japan’s Kioxia—as a special dividend. In response, SK Hynix issued a clarification statement noting that nothing has been finalized yet and that it will disclose additional shareholder return plans, subject to a board resolution, during its third-quarter earnings announcement on the 28th.

SK Hynix had already completed a share buyback program worth approximately 40 trillion won on the 21st. The company plans to cancel all of the repurchased shares. If the 16 trillion won special dividend is actually implemented, the funds allocated to these two transactions alone will total approximately 56 trillion won. With the need to secure a new production facility for Solidigm in the U.S. still pressing, the key issue is how to allocate funds between shareholder returns and capital expenditures.

In particular, since plans to raise external equity capital through an IPO have been suspended, attention is focused on which approach the company will choose: utilizing its own cash, expanding borrowing, or attracting investment in unlisted equity through a new structure. SK Hynix is also pushing ahead with large-scale investments in its core businesses, such as HBM and DRAM. Its long-term domestic investment plans alone—including 600 trillion won in Yongin, 400 trillion won in the Southwest region, and 100 trillion won in Cheongju—total 1,100 trillion won.

The group’s U.S. AI investment strategy is another variable. U.S. AI Company, the parent company of Solidigm, is an investment platform established by SK Group to expand the global AI ecosystem. Since it is a key pillar of the “full-stack AI” strategy championed by SK Group Chairman Choi Tae-won, observers note that any change in Solidigm’s funding method could impact the group’s AI business investment plans.

Analysts suggest that the key challenge lies in securing the necessary investment funds while balancing financing costs and the burden of equity dilution on existing shareholders. This means that the scale of investment required to expand Solidym’s production facilities, the timing of its execution, and the terms for attracting external capital must all be reevaluated.