Analysts Say SK hynix Can Fund Solidigm Internally
As SK hynix halted its review of the initial public offering (IPO) for its U.S. second-tier subsidiary Solidigm, concerns were raised regarding the procurement of investment funds to expand production facilities, but the securities industry collectively stated, “There is no need to worry.” The indus
Analysts assert that SK hynix can fund its subsidiary, Solidigm, internally, dispelling worries about the acquisition of investment funds for expanding production facilities. The securities sector believes that SK hynix's projected profits will be ample enough to support both shareholder returns and capital expenditures (CAPEX) as long-term agreements (LTVs) surge due to a semiconductor supply shortage.
Mirae Asset Securities anticipates that SK hynix's free cash flow (FCF) this year will reach 180 trillion won, while SK Securities projects it will exceed 260 trillion won next year. SK hynix's combined operating profit for 2026 to 2027 is forecasted at 648 trillion won, with a 50% increase expected next year. The company's memory production volume for 2027 is largely secured through 5-year LTVs with global big tech customers, with only 20-30% of the remaining production capacity requiring contracts.
Despite the withdrawal of Solidigm's IPO, SK hynix can secure funding through internal resources, as the company is investing in new domestic factories and upgrading the existing Solidigm facility. This strategy is advantageous from both an investment perspective and shareholder standpoint, as it reduces the burden of external financing costs and allows for value recognition in the US before listing on the Nasdaq.
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