Shares of South Korean chipmaker SK Hynix’s fell 3% in Seoul on Friday morning after the company halted review of a possible U.S. IPO for its Solidigm subsidiary.
“Solidigm will pause its review of potential pre-IPO and initial public offering options,” the company said in the statement after evaluating recent capital market conditions and stock price trends, while exploring various financing options to fund a new U.S. semiconductor manufacturing facility amid growing demand for AI memory.
The chipmaker said an IPO could have helped fund Solidigm’s expansion while providing greater financial flexibility for shareholder returns, including dividends, share buybacks and share cancellations.
However, financial market volatility increased and contributed to a broader correction in semiconductor stocks, prompting SK Hynix to reevaluate whether an IPO would benefit existing shareholders.
The company also said Solidigm’s existing production facilities have limited capacity to meet the growing demand for AI-based memory, highlighting the need for additional manufacturing capacity in the United States.
The decision also follows a regulatory review in South Korea.
The country’s financial regulator said Monday that a possible U.S. listing of Solidigm could violate South Korean rules restricting dual listings, according to Reuters.
Financial Supervisory Service Governor Lee Chan-jin said regulators were examining whether the IPO would require review under the country’s rules meant to protect minority shareholders.
SK Hynix said Solidigm’s investment needs remained unchanged and it would continue to explore alternative financing options to support the subsidiary’s growth and increase shareholder value.
The announcement comes as U.S. tech stocks are under pressure due to concerns over AI spending. The tech-heavy Nasdaq Composite slipped 2.6% on Thursday, its worst session since June, while Nvidia fell 4.4% and Advanced Micro Devices fell 8.1%.
Amid a sell-off in memory stocks, Nvidia CEO Jensen Huang told CNBC on Thursday that he doesn’t expect an oversupply of memory chips by 2029, despite concerns about weakening demand.
AI data center stocks have also been under pressure due to growing concerns about financing risks and the pace of AI infrastructure expansion. CoreWeave shares plunged 10% on Thursday, extending their monthly decline to 36%, while Australia’s NextDC fell almost 40% on Wednesday after cutting its profit forecast.
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