Micron, Sandisk gain as SK Hynix scraps Solidigm IPO, LYNX says

SK Hynix’s decision to scrap plans for a U.S. initial public offering of its Solidigm business could benefit Micron Technology and Sandisk by reducing the risk of additional NAND flash supply entering the market, according to LYNX Equity Strategies.

The analyst team led by KC Rajkumar said in an Oct. 23 note that a U.S. IPO would have provided Solidigm with capital to finance additional NAND manufacturing capacity in the United States. That expansion could have increased global supply in three or more years, potentially putting pressure on prices and competing suppliers.

With the IPO scrapped, that potential source of funding has disappeared, reducing the prospect of a capacity expansion that could have weighed on NAND prices. “The overhang of new capacity addition to the global supply of NAND flash has been eliminated,” LYNX wrote.

The proposed U.S. facility was expected to involve a joint venture between SK Hynix and Intel, potentially at Intel’s Ohio campus. A U.S.-based operation would also have faced fewer trade restrictions than Solidigm’s existing fabrication facility in China, according to LYNX, potentially allowing a faster expansion of production.

LYNX said the news would ordinarily represent a material positive for Micron and Sandisk, both NAND suppliers, as a lower risk of future capacity growth could support industry pricing and valuations. However, the team cautioned that the current market environment could limit any share-price gains despite the favorable supply implications.

Intel, meanwhile, could face a minor negative from the decision, as the abandoned plan removes a potential manufacturing project for its Ohio campus.

The broader implication for memory stocks is that the cancellation reduces a potential source of future competition, rather than immediately changing existing NAND supply. Any benefit to Micron and Sandisk will depend on how the industry’s capacity plans and supply-demand balance evolve.