SK hynix builds U.S. SSD plant with internal funds after canceling Solidigm IPO

SK hynix is funding a new manufacturing facility for its U.S.-based storage unit with internal cash rather than seeking outside investors. The company announced on Friday, October 23, that it has stopped reviewing an initial public offering for Solidigm, its subsidiary that produces enterprise solid-state drives. The decision means shareholders will not receive new stock, and the parent company will retain full ownership of the division while paying for the expansion from its own reserves.

The shift in strategy comes as demand for high-capacity data center storage rises alongside AI infrastructure projects. Solidigm manufactures drives using floating gate 3D QLC NAND memory, a technology designed for large-scale storage needs. The company stated that current production capacity is barely sufficient for expected demand. The new plant in the United States is intended to close that gap and expand SK hynix's manufacturing footprint in the country.

SK hynix had previously considered several financing options, including a pre-IPO funding round and a full stock market listing. An offering would have allowed the company to raise capital without taking on new debt. It would also have provided a public valuation for Solidigm, which management believes is higher than what is currently reflected in the parent company's market capitalization. However, the company cited unfavorable stock market conditions and a recent correction in semiconductor share prices as reasons for abandoning the listing plan.

The move relies on the strong financial performance of the storage division. Solidigm holds 21.1% of the enterprise SSD market. Industry peers report high profitability in this sector, with Micron's enterprise storage division recently reporting a non-GAAP gross margin of 90%. If Solidigm maintains similar margins, the unit can generate substantial cash flow to support the new construction costs.

Building a modern 3D NAND fabrication plant typically requires tens of billions of dollars in investment. By using internal funds, SK hynix avoids diluting its ownership stake in a highly profitable subsidiary. The company has not yet disclosed the specific size of the new facility, the total project cost, or the expected timeline for construction. It will continue to evaluate other financing methods to support the expansion.

The decision reflects a preference for keeping a valuable asset under direct control. With enterprise SSD demand at record levels, the company aims to capture future revenue without selling a portion of the business at a valuation it considers too low. The new plant will serve the growing market for AI-driven storage needs in the United States.