SK Square's 7.6% Plunge on Solidigm IPO Buzz: Will Unlocking Value for One SK Unit Come at a Cost to Others?

Shares of SK Square tumbled 7.6% to KRW 1,100,000 on September 28 after reports surfaced that Solidigm — the U.S.-based NAND flash storage subsidiary of SK hynix — may pursue a Nasdaq listing, sparking immediate fears about dilution and a reshuffling of value across SK Group's complex corporate family. SK Square's Worst Day in Weeks as Solidigm IPO Talk Rattles Investors: Is a Five-Layer Corporate Cake Too Many Layers Deep?

Shares of SK Square cratered 7.6% to KRW 1,100,000 on September 28, hit hardest among SK Group affiliates after weekend reports confirmed that Solidigm — SK hynix's U.S. data-storage arm — is actively exploring a Nasdaq listing that could value it at up to $150 billion. SK hynix itself fell 5%, the most in two weeks, after Bloomberg confirmed Solidigm is considering a U.S. IPO as soon as next year. The sell-off raises a pointed question: does carving out a lucrative AI-linked business help or hurt the shareholders already sitting atop the corporate pyramid?

• The Money at Stake Is Massive — And So Is the Ownership Maze. The offering could raise as much as $15 billion, although the size and timing remain uncertain. That would dwarf Arm's 2023 Nasdaq IPO, which raised $4.87 billion — making Solidigm's proceeds roughly three times larger. But SK Square's role in the chain is what spooked investors. The ownership runs from SK Group Chairman Chey Tae-won through SK Inc., SK Square, SK hynix, and a U.S. subsidiary to Solidigm — meaning profits must travel through five layers before reaching the top. If a portion of NAND profits flows to new Solidigm investors as dividends, the economic share that SK hynix shareholders indirectly enjoy could shrink.

• Governance Critics Called This "Exporting the Korea Discount." The Korea Corporate Governance Forum, a nonprofit of investment professionals, urged SK hynix in August to drop the plan, arguing it deepens a pyramid structure already under scrutiny. South Korea's Fair Trade Act caps pyramid ownership at three tiers, but the restriction doesn't apply to overseas affiliates. That loophole is precisely what makes the Solidigm listing possible — and precisely what worries Korean market participants.

• Solidigm's Turnaround Is Real, But Its Balance Sheet Is Fragile. Solidigm returned to profitability in 2024 with full-year profit of KRW 830.7 billion after racking up roughly KRW 8 trillion in cumulative losses from 2021 to 2023. Yet a debt ratio of 4,484.6% will not resolve overnight, even with pre-IPO fundraising. Investors will question whether one profitable year justifies a valuation sixteen times the original $9 billion acquisition price.

• SK Square Gets Squeezed as the Middle Link. As the holding company between SK Inc. and SK hynix, SK Square's value derives almost entirely from its SK hynix stake. While an IPO could unlock Solidigm's value and provide capital for expansion, SK hynix shareholders would "undoubtedly surrender a portion of future earnings." For SK Square, that dilution compounds — each dollar redirected to Solidigm's new public shareholders is a dollar further from SK Square's own bottom line.