Memory maker SK Hynix announced record share buyback

South Korean memory chip maker SK Hynix announced a large-scale program to buy back and cancel its own shares totaling about 40 trillion won, or $28.7 billion. The company calls it the largest share buyback program in the history of the South Korean stock market.

The board of directors of SK Hynix approved the acquisition of approximately 24.07 million shares, which corresponds to about 3.3% of the total number of company shares. After the buyback, the securities are planned to be cancelled, which will reduce the number of shares in circulation.

The program starts on August 20 and will run until November 19, 2026. The actual number of purchased securities may change depending on their market price.

SK Hynix increases shareholder payouts

At the same time, the company revised its policy of returning funds to investors. In 2025-2027, SK Hynix plans to allocate more than 50% of its cumulative free cash flow to shareholders through share buybacks and dividends. Previously, the company targeted up to 50%.

SK Hynix is also considering increasing cash dividends. A more detailed plan for additional payouts is expected to be presented along with the results for the third quarter.

Financial capacity for such a move has sharply increased amid the artificial intelligence boom. SK Hynix is one of the key global manufacturers of high-speed HBM memory, which is used in accelerators for AI systems, including Nvidia products.

At the end of the second quarter, SK Hynix's net cash position amounted to about 69 trillion won. The company stated that its current market value does not fully reflect its competitive position, ability to generate cash, and long-term growth prospects.

Shares reacted with gains

The announcement of the program provided support for SK Hynix shares after a sharp drop the previous day. The company's shares lost almost 10% on August 19 amid a broad sell-off in the chipmaker sector, caused by investor concerns about high valuations of technology companies and the sustainability of the AI investment boom.

After the announcement of the record buyback, investor sentiment improved, and SK Hynix shares began to recover. Despite recent volatility, the memory maker's shares have more than doubled since the beginning of the year.

Based on materials: MarketWatch, The Wall Street Journal, The Hankyoreh