Fadu IPO Fraud Trial: “We’ll Go Under Without Listing” vs. “Conservative Revenue Estimates”

What happened

The 13th Criminal Division of the Seoul Southern District Court held the fourth hearing on Oct. 22 in the case against Fadu executives over alleged violations of the Capital Markets Act, with former CEO Lee Ji-hyo, current CEO Nam Yi-hyun and executive vice president Won Jong-taek attending as defendants. Prosecutors disclosed internal Microsoft Teams conversations from March 2023 — including 'If we can't go public, we'll have a funding hole' and 'So we'll just go under in July' — arguing Fadu pressed ahead with its IPO despite knowing revenue would plunge; Fadu went public in August 2023. Prosecutors also alleged Fadu used earlier order forecasts for its securities registration statement despite knowing major customers including SMART Modular, SpaceX and SK hynix had postponed or suspended orders for the second half of 2023, with Fadu having projected shipments of 3,200 SSDs for SpaceX satellite servers in Q4 2023. According to prosecutors, former CEO Lee Ji-hyo instructed staff on May 18, 2023 to 'assume no orders from SpaceX for now,' and the following day SpaceX informed Fadu there would be no additional POs before Q3 2024. EVP Won Jong-taek wrote in May 2023 that 'even if we lower the annual revenue target from 240 billion won to 150 billion won, actual results will likely be far lower.' Fadu's production plan from late May 2023 had removed H2 SpaceX orders, and contract manufacturer Quanta Storage demanded compensation for prolonged equipment downtime. The defense countered that the registration statement figures were conservative, worst-case estimates: Fadu included only about 50% of SMART Modular's anticipated order volume, excluded more than 30,000 additional units proposed by SMART Modular in late April 2023 and a 43,500-unit forecast from Hagiwara Solutions in May 2023; on the SpaceX suspension, the May 19 remark came from a SpaceX technical engineer rather than a purchasing official, and Lee Ji-hyo separately confirmed with SpaceX's sales organization the possibility of orders resuming within the year. Fadu resumed shipments toward the end of 2023, but supplied 2TB models for Falcon 9 rockets rather than the originally planned 8TB satellite models, with substantially smaller revenue contribution. Second witness Park Jong-hyun, head of Fadu's SoC business team, testified the sharp 2023 decline in SSD controller shipments for Meta stemmed from issues between SK hynix and Meta: SK hynix told Fadu in late 2022 it expected to supply about 900,000 controllers annually to Meta, but the forecast was abruptly cut to 350,000 units on Jan. 6 due to a dispute, and SK hynix discontinued the existing DRAM used in Meta SSDs and began redesigning. Fadu planned to cut the price of its third-generation SSD controllers from $43–$48 to around $30 to regain Meta's business, and included 434,000 controllers for Meta in its 2023 forecast — exceeding the 350,000-unit forecast — which appeared to contradict claims the estimates were conservative. Fadu ultimately failed to secure additional Meta orders through SK hynix; Meta switched its SSD supplier to SanDisk in 2024, and since 2024 Fadu has supplied SSD controllers to Meta through SanDisk.

Impact and signal

Affected components and suppliers

Source and time

Source: The Elec · 10/25/2026 · View original source