Shares of South Korean semiconductor maker SK Hynix fell as much as 3% in the Seoul market on Friday morning after the company halted consideration of a possible U.S. initial public offering for its subsidiary Solidigm.
After evaluating recent capital market conditions and stock price trends, the company said in a statement that “Solidigm is discontinuing consideration of potential pre-IPO and IPO options,” and said in a statement that it is also considering various financing options to fund a new U.S. semiconductor manufacturing facility as demand for AI memory grows.
The chipmaker said the IPO could have helped Solidigm fund its expansion and give it more financial flexibility for shareholder returns such as dividends, share buybacks and stock cancellations.
However, as volatility in the financial market increased and the range of correction in semiconductor stocks widened, SK Hynix was forced to reevaluate whether the IPO would benefit existing shareholders.
The company also emphasized the need for additional manufacturing capacity in the U.S., saying Solidigm’s existing production facilities have limited capacity to meet the growing demand for AI-driven memory.
The decision also came under scrutiny from South Korean regulators.
The country’s financial regulator said on Monday that Solidim’s potential U.S. listing could violate South Korean rules restricting dual listings, Reuters reported.
Financial Supervisory Service Governor Lee Chang-jin said regulators were considering whether the IPO required review under the country’s rules aimed at protecting minority shareholders.
SK Hynix said Solidigm’s investment needs remain unchanged and it will continue to explore alternative financing options to support the subsidiary’s growth and enhance shareholder value.
The announcement comes as U.S. technology stocks face pressure amid concerns over AI spending. On Thursday, the tech-heavy Nasdaq Composite Index fell 2.6%, its worst session since June, while Nvidia fell 4.4% and Advanced Micro Devices fell 8.1%.
As memory stocks slide, Nvidia CEO Jensen Huang told CNBC on Thursday that the company does not expect an oversupply of memory chips by 2029, despite concerns about declining demand.
AI data center stocks have also come under pressure amid growing concerns about funding risks and the pace of AI infrastructure expansion. Coreweave’s share price plunged 10% on Thursday, extending its monthly decline to 36%, while Australia’s NextDC fell nearly 40% on Wednesday following a downward revision to its profit forecast.
