Ample Cash, Yet Seeking Investment Funds? Key Issues in the Solidigm Duplicate Listing Controversy

At the heart of the issue: a "complex ownership structure"... Chairman Choi Taewon holds 17.9% of SK Inc.
SK Inc. → SK Square → SK hynix → AI Company → Solidigm
"Controversy will end only when meaningful shareholder protection measures are presented

The controversy surrounding reports that Solidigm, a subsidiary of SK hynix, may list on the Nasdaq in the United States is not simply about “duplicate listing.” The market’s focus is on the “complex ownership structure” stretching from SK Inc., in which SK Group Chairman Choi Taewon holds a stake, through SK Square, SK hynix and AI Company, a U.S. entity, to Solidigm. Beyond concerns about the dilution of share value resulting from a listing and the holding company discount, there are numerous issues to examine, including the investment structure of AI Company, which involves SK Group affiliates, within an unprecedented five-tier ownership chain.

According to the financial investment industry on October 20, SK hynix continues to deny that anything has been finalized regarding Solidigm’s initial public offering (IPO), while the market is treating a Nasdaq listing next year as a foregone conclusion. Solidigm is reportedly already selected Goldman Sachs and Morgan Stanley as lead underwriters for its IPO. Major foreign media outlets have estimated Solidigm’s corporate value at up to $150 billion (about 200 trillion won).

Yonhap News Agency

On the surface, this appears to be an effort to attract external capital and expand investment capacity while making large-scale investments in high-bandwidth memory (HBM), advanced packaging and NAND at the same time. However, questions persist about why SK hynix would push ahead with a Solidigm listing, accepting the resulting controversy, when it has ample financial resources. At the end of the second quarter, SK hynix had about 88 trillion won in cash and cash equivalents, up 33.6 trillion won from the previous quarter. In addition, it raised about 40 trillion won through an American depositary receipt (ADR) offering in July, leaving it with ample “firepower.” Critics say there is no reason to list Solidigm to raise $10 billion to $15 billion (about 14 trillion to 19 trillion won), given that SK hynix is expected to hold more than 130 trillion won in cash by the end of 2026.

Current SK hynix shareholders are strongly protesting, arguing that if Solidigm’s core NAND flash and solid-state drive (SSD) businesses are recognized as a separate entity’s value, existing shareholder value will be undermined, as happened with LG Energy Solution and Kakao affiliates in the past. Although Solidigm’s case differs legally and structurally from those examples because it involves the overseas listing of a subsidiary acquired through a merger and acquisition (M&A), critics say it amounts to a variation of the same practice. On October 19, Financial Supervisory Service Governor Lee Chanjin also said that Solidigm’s Nasdaq listing would fall under regulations on duplicate listings.

Above all, what shareholders consider the biggest problem is the complex ownership structure. Chairman Choi holds a 17.9% stake in SK Inc. and has exerted influence over the semiconductor business through the ownership structure linking SK Inc. to SK Square and then to SK hynix. Until he purchased his first SK hynix shares in his personal capacity in late July 2026, Chairman Choi’s indirect ownership stake in SK hynix was just 1.2%. AI Company and Solidigm add further tiers to the structure.

Lee Namwoo, chairman of the Korea Corporate Governance Forum, called it “an unprecedented five-tier duplicate listing anywhere in the world,” adding that “the distorted holding company structure and Chairman Choi’s low effective stake compared with overseas competitors are behind the poor shareholder returns and attempts at duplicate listings.” If Solidigm also lists, as many as four listed companies will be part of this five-tier ownership chain.

Controversy over the pre-listing investor makeup and potential conflicts of interest has also continued, following reports that a U.S. investment firm led by former SK hynix President Noh Jongwon, who previously oversaw Solidigm’s acquisition, plans to invest in Solidigm. Lee called for the company to “eliminate unnecessary subsidiary structures and disclose whether anyone affiliated with SK Group is among the founding shareholders or investors in the investment firm backed by former SK hynix President Noh.”

Experts are also keeping an eye on AI Company, which sits between SK hynix and Solidigm. AI Company could become a funding channel through a pre-IPO share sale of Solidigm, including a secondary share sale, and SK Inc., SK Telecom and SK Innovation have invested in it. People Power Party lawmaker Ahn Cheolsoo said, “SK affiliates that hold stakes in AI Company, which owns Solidigm, will take all the proceeds from the [Solidigm] listing,” calling it “a ‘skim company’ scheme designed to let the SK owner and affiliates siphon off the interests of SK hynix shareholders.”

Kim Hyunjung, a Democratic Party of Korea lawmaker, also said "it is a structure that transfers wealth to AI Company, where Chairman Choi has significant control," criticizing it as "taking away from ordinary shareholders to increase the owner’s share." She also pointed out that AI Company is not subject to domestic holding company regulations because it is an overseas entity.

However, some argue that a Solidigm listing would not deal a decisive blow to SK hynix’s corporate value. They say the listing is simply part of the company’s efforts to recover and reinvest capital, and could instead increase SK hynix’s future value. Mirae Asset Securities also viewed a Solidigm listing favorably as a way to secure funding for future investments.

Ultimately, resolving the controversy will require more than the official statement that “nothing has been finalized.” The company needs to provide specific details on the proportion of newly issued shares and secondary share sales; why it chose this approach instead of a listing through an in-kind dividend; the basis for pre-IPO and offering price valuations; how gains from changes in value before and after listing will be distributed; and how proceeds from sales of existing shares will be used. A senior securities industry official said, “SK hynix has stated that it will put shareholder value first, but the controversy will inevitably continue unless it explains why it chose this complex ownership structure and presents substantive measures to protect shareholders.”

This content was produced with the assistance of AI translation services.