S.Korea says SK Hynix’s Solidigm listing could violate rules- reports

South Korea's top financial watchdog has cautioned that SK Hynix's planned listing of its subsidiary, Solidigm, in the United States may breach domestic rules on overlapping corporate listings, a report by Chosun stated on Monday. This news sent SK Hynix shares down by 2%, to 1.247 million won, trailing the KOSPI index, which gained 0.8% to 5,715.9 points.

Lee Chan-jin, governor of the Financial Supervisory Service, disclosed during a parliamentary audit that the watchdog and the Financial Services Commission deemed the proposed listing would breach rules against overlapping listings. Authorities are still deciding whether Solidigm, an overseas subsidiary, is subject to South Korea's domestic securities reporting rules.

The issue is primarily about investor protection; South Korea typically bans overlapping listings to avoid new share sales diluting existing shareholders' economic stakes. SK Hynix owns all of Solidigm's profits currently. However, if Solidigm were to issue shares to outside investors in the U.S., some of those profits would then belong to new shareholders, potentially reducing the benefits for SK Hynix shareholders.

Established in 2021, after SK Hynix took over Intel's NAND flash memory and solid-state drive business, Solidigm is now considering an initial public offering as early as 2027, potentially raising up to $15 billion and valuing the company at up to $150 billion. SK Hynix says it is reviewing measures to boost Solidigm's competitiveness, but no decision has been made yet.

Lee indicated that authorities are awaiting a definitive interpretation from the Financial Services Commission on Solidigm's classification under domestic securities reporting requirements, and that regulators will consider appropriate measures and communicate their concerns to SK Hynix.