Shares of SK Hynix experienced a notable rebound after initially dropping earlier in the session, following the company’s announcement that it would halt its evaluation of a potential initial public offering (IPO) for its U.S. subsidiary Solidigm. The chipmaker’s stock gained 3.2% as investors reacted positively to the decision, which came amid regulatory scrutiny in South Korea and increased volatility in financial markets. The move effectively removes near-term governance concerns related to Solidigm’s public listing and keeps the subsidiary’s value consolidated within SK Hynix.

The decision to stop pursuing Solidigm’s IPO consideration comes as South Korea’s financial authorities voiced concerns that the listing might breach the country’s dual listing regulations, which are intended to protect minority shareholders. The Financial Supervisory Service, led by Governor Lee Chan-jin, indicated that the IPO would require a thorough review under existing rules. This regulatory challenge added pressure on SK Hynix, which was already facing headwinds from broader market instability, particularly within the semiconductor sector.

SK Hynix emphasized that, despite halting IPO plans, Solidigm’s need for investment remains unchanged and the company will continue exploring alternative financing avenues to support the subsidiary’s expansion, including building a new semiconductor fabrication plant in the U.S. The proposed IPO was initially intended to provide capital for growth while allowing SK Hynix to maintain flexibility in shareholder returns such as dividends, share buybacks, and cancellations. However, the company acknowledged that worsening market conditions and share price trends necessitated a reassessment of the best approach to fund Solidigm’s development without diluting shareholder value.

The announcement coincides with a turbulent period for technology and memory stocks, as investors grapple with uncertainty over artificial intelligence (AI) spending and demand for memory chips. The Nasdaq Composite recently suffered its worst session since June, with major industry players like Nvidia and Advanced Micro Devices seeing significant share price declines. Nonetheless, Nvidia’s CEO Jensen Huang expressed confidence that memory chip supply will remain balanced through 2029. Meanwhile, concern over financing in the AI infrastructure space has also contributed to downward pressure on stocks such as CoreWeave and NextDC.