(Bloomberg) — SK Hynix Inc. shares fell as media reports of a potential listing of the chipmaker’s US subsidiary added to concerns over its complex ownership structure.
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SK Hynix shares dropped 5%, the most in two weeks, after Bloomberg confirmed over the weekend that Solidigm is considering a US initial public offering as soon as next year that could value the data-storage product maker at as much as $100 billion. SK Hynix’s biggest holder SK Square Co. tumbled more than 8%, while SK Inc., which controls SK Square, retreated more than 6%.
An IPO of Solidigm would add to the multiple layers of ownership within the group, deepening the pyramid ownership structure, according to the Korea Corporate Governance Forum, a non-profit of investment professionals, which in August urged SK Hynix to drop the plan. SK Hynix owns the NAND memory unit through US subsidiary AI Company, making Solidigm a so-called grandchild company.
“I would be watchful rather than alarmed,” said Jung In Yun, chief executive officer at Fibonacci Asset Management Global. “A US listing could unlock Solidigm’s value and fund expansion, but SK Hynix shareholders would be giving up a portion of its future earnings.”
“The key is the valuation and the use of proceeds,” Yun said. “Selling a small stake at an attractive price could create value, while substantial dilution without a convincing investment return would be a concern.”
Shares of SK Hynix and other chipmakers, including Samsung Electronics Co., also came under pressure from broader risk-off mood after oil prices rose.
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