Key points
- SK Hynix's new U.S. AI arm gets a name
- How SK Hynix and SK Telecom set Penguin's price
- SK Hynix's Penguin rights stop short of control
SK Hynix (SKHY) bought a stake in Penguin Solutions (PENG) from sister company SK Telecom (SKM) for $377.2 million, according to a U.S. securities filing published November 3. The stake consists of preferred shares that can be converted into about 9.1% of Penguin's common stock.
The buyer sits under HYAICO Corporation, the U.S. AI investment company SK Hynix announced in January under the temporary name AI Co. The filing revealed its permanent name, Bloter (블로터) reported.
SK Telecom sold the shares on October 29, after paying $200 million for them in December 2024. The sale price was about 89% higher, by our calculations.
The price works out to about $61.87 for each Penguin common share the preferred stake can convert into. Penguin traded at $48.72 as of 10:47 a.m. ET on November 4, down 8.4% from its previous close of $53.19. The comparison isn't exact: the preferred shares also carry dividend and other rights.
SK Hynix's U.S.-listed shares traded at $143.96 as of 10:47 a.m. ET, down from their previous close of $150.79.
HYAICO uses Solidigm's existing legal entity
In January, SK Hynix said it would put up to $10 billion into a U.S. company focused on AI. That company is being built from SK hynix NAND Product Solutions Corp., the existing legal entity behind Solidigm.
The NAND and enterprise SSD business is moving to a new subsidiary called Solidigm Inc., keeping the Solidigm name with the memory business.
HYAICO's officer list shows directors from across SK Group. Group chairman Chey Tae-won chairs the board, and SK Hynix President Song Hyun-jong is president and CEO. The other directors are former SK Hynix Vice Chairman Park Sung-wook, SK Hynix CEO Kwak Noh-jung, and SK Telecom CEO Jung Jai-hun.
The stake now sits under HYAICO
The Penguin shares are held by SHIFTIX1 LLC. When the deal was signed, SK Telecom's July filing described SHIFTIX1 as a wholly owned SK Hynix subsidiary. Cox News (콕스뉴스) reported in August that the purchase was separate from AI Co., where other SK companies had also agreed to invest.
The November 3 filing describes SHIFTIX1 as an indirect, wholly owned subsidiary of HYAICO. It calls HYAICO a majority-owned SK Hynix subsidiary. Neither filing explains the change.
How the $377 million was set
The stock transfer agreement set a base price of $380,296,000 on July 27. That price falls by any cash dividends Penguin paid to SK Telecom's investment vehicle before closing, and by the value of any shares withheld for tax. The final price of $377,162,666 was about $3.13 million lower. That's close to one quarter's dividend at the 6% annual rate on $200 million, but the filings don't itemize the difference.
Penguin closed at $52.49 on July 27, so the base price was about $62.38 a share, or about 19% above that close, by our calculations. The stock then ran up after Penguin's October 6 earnings report and closed above $79 on October 12. By the October 29 closing date, the stock was back at $58.79, about 5% below what SK Hynix paid.
SK Hynix bought convertible preferred stock, which is a preferred share that the holder can swap for common stock at a fixed price. This one converts at about $32.81 and pays a cumulative 6% dividend on $200 million, or about $12 million a year. That's about 3.2% on the $377.2 million SK Hynix paid, by our calculations.
SK Hynix said in August that the deal can't be fairly judged against the original cost because of those features. SK Telecom said outside advisers reviewed the price. Neither company disclosed the valuation method or the advisers' findings.
Both sides said in the agreement that they negotiated at arm's length. SK Hynix's unit also acknowledged that the value of the shares could be "substantially less than the Purchase Price."
SK Hynix gets a board nomination right, not control
HYAICO takes over the rights SK Telecom held under its investor agreement with Penguin. SK Hynix's group can nominate one director, or two if Penguin's board has 12 or more members, as long as the group owns at least 5% of the common stock. The group can also buy into new share sales to keep its stake from shrinking, and it has consent rights over Penguin's ability to take on debt.
The agreement also limits what SK Hynix can do. While the standstill runs, the group can't launch a tender offer, call a shareholder meeting, or solicit proxies unless Penguin's board agrees. The group must also vote with the board's recommendation. The filing says the group has no present plans for a merger, a board change, or more share purchases, though those plans could change. The filing doesn't name a director.
Penguin started as SMART Modular Technologies, a memory module maker founded in 1988, and now sells AI computing systems along with memory. On November 4, Penguin agreed to sell its Cree LED business to Transom Capital Group and kept its fiscal 2027 outlook. Chief Executive Kash Shaikh said the sale would let Penguin concentrate on AI data centers. The release gave no price, and the deal is expected to close in the first quarter of 2027.
The next steps to watch are whether HYAICO names a director to Penguin's board and what SK Hynix says about its Solidigm investment, which SK Hynix has promised to detail by late November.
