The Korea Corporate Governance Forum has urged an immediate halt to discussions around listing Solidigm Inc., SK Hynix’s U.S. subsidiary, on Nasdaq, calling it “a five-tier double listing attempt unprecedented anywhere in the world.”<\/p>\n
In a commentary released on the 13th, the forum explicitly named SK Group Chairman Chey Tae-won and SK Hynix Board Chairman Koh Seung-beom, sharply criticizing the move: “Expanding the governance pyramid through overseas entities to circumvent South Korea’s three-tier restriction under the Fair Trade Act is an act of exporting the ‘Korea discount’ abroad.”<\/p>\n
According to the forum’s analysis, a Solidigm listing would create a five-tier structure: Chairman Chey Tae-won \u2192 SK Inc. \u2192 SK Square \u2192 SK Hynix \u2192 SK hynix NAND Product Solutions Corp \u2192 Solidigm. This is an exceptionally complex pyramid structure with few precedents even among domestic listed companies.<\/p>\n
Solidigm is reportedly pursuing a pre-IPO funding round of 5 trillion to 10 trillion won (approximately $3.5 billion to $7.0 billion), with the market discussing a total enterprise value of around 50 trillion won (approximately $35.1 billion). SK Hynix stated in a regulatory filing that “Solidigm is reviewing various options to strengthen competitiveness, but nothing has been finalized to date.”<\/p>\n
The forum emphasized: “Among major global semiconductor companies such as NVIDIA and Taiwan’s TSMC, there are no examples of pursuing a subsidiary double listing. Now is the time to first address the existing domestic three-tier double listing of SK Inc.-SK Square-SK Hynix, rather than expanding the pyramid through overseas entities.”<\/p>\n
Identified as Core Cause of Undervaluation<\/p>\n
The forum pointed to this complex governance structure and piecemeal listing attempts as the core reason for SK Hynix’s severe stock undervaluation.<\/p>\n
SK Hynix’s 12-month forward price-to-earnings ratio (PER) stands at just 3x. JPMorgan estimates that SK Hynix will generate total free cash flow (FCF) of 811 trillion won (approximately $569.8 billion) over the next three years \u2014 213 trillion won (approximately $149.6 billion) in 2026, 265 trillion won (approximately $186.2 billion) in 2027, and 333 trillion won (approximately $234.0 billion) in 2028.<\/p>\n
The forum explained: “The fact that the market does not reflect hundreds of trillions of won in cash flow in the stock price is due to distrust of the controlling shareholder and management \u2014 in other words, ‘key-man risk.’ It reflects market concerns that profits earned by the company will not be properly attributed to ordinary shareholders.”<\/p>\n
Concerns Over ‘Wealth Transfer’ in Capital Call Structure<\/p>\n
The forum also raised issues with the capital call structure, under which SK Telecom ($480 million), SK Inc. ($250 million), and SK Innovation ($380 million) have resolved to invest in Solidigm’s parent company.<\/p>\n
The forum argued that this “suggests the possibility of ‘wealth transfer’ from companies where the controlling shareholder has low cash flow rights to those where they are higher.” The concern is that the fruits of Solidigm \u2014 which SK Hynix nurtured while bearing the risk \u2014 could be shared by other affiliates such as SK Inc., where Chairman Chey Tae-won holds a higher stake, just before the listing, resulting in wealth transfer from “Hynix shareholders \u2192 SK Inc.”<\/p>\n
The forum also raised accountability questions for SK Hynix’s six outside directors, including Chairman Koh Seung-beom and directors Chung Deok-kyun, Kim Jung-won, Yang Dong-hoon, Son Hyun-chul, and Choi Kang-guk. The forum stated: “The board has failed to fulfill its role of protecting ordinary shareholder rights and has degenerated into a ‘rubber-stamp board.’ Under Article 390 of the Commercial Act, directors should request the convening of a board meeting to review the Solidigm listing push and whether it infringes on shareholder rights.”<\/p>\n
Mixed Market Assessments<\/p>\n
In contrast, Mirae Asset Securities opined that this matter should be approached as recovery of M&A investment and expansion of follow-up investment resources, rather than a double listing. The firm assessed that the stake sale would unlock approximately $15 billion \u2014 roughly 21.4 trillion won \u2014 in additional investment capacity.<\/p>\n
SK Hynix plans to rename its U.S. subsidiary ‘SK Hynix NAND Product Solutions Corp.,’ which was incorporated through the acquisition of Intel’s NAND business, and convert it into an AI-focused investment entity (tentatively named AI Company). The re-disclosure date is scheduled for September 4.<\/p>\n
The forum demanded: “The independence of the board is something that must be protected through its own choices and responsibility. SK Group and the board should present a roadmap to simplify and reduce the governance structure in line with global standards, rather than scheming to add more pyramid layers.”<\/p>\n
Chairman Chey Tae-won is an unregistered executive of SK Hynix and is not a member of the Hynix board. SK Hynix stated that it has no particular position on the commentary.<\/p>\n","protected":false},"excerpt":{"rendered":"The Korea Corporate Governance Forum has urged an immediate halt to discussions around listing Solidigm Inc., SK Hynix’s…\n","protected":false},"author":2,"featured_media":117883,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[22],"tags":[2589,8229,60929,43273,1550,241,275,6124,676,35576],"class_list":["post-117882","post","type-post","status-publish","format-standard","has-post-thumbnail","category-sk-square","tag-chey-tae-won","tag-jpmorgan","tag-koh-seung-beom","tag-korea-corporate-governance-forum","tag-mirae-asset-securities","tag-sk","tag-sk-hynix","tag-sk-inc","tag-sk-square","tag-solidigm"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/posts\/117882","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/comments?post=117882"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/posts\/117882\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/media\/117883"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/media?parent=117882"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/categories?post=117882"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/tags?post=117882"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}