SK Hynix, the world’s leading maker of advanced AI memory chips, announced a record 40 trillion won ($28.6 billion) share buyback program on Tuesday, sending its Seoul-listed shares surging more than 12% in early trading.
The buyback, which the company plans to complete through open-market purchases and subsequent cancellation of all repurchased shares, represents the single largest shareholder return initiative in South Korean corporate history. SK Hynix said the program is part of a broader pledge to return more than 50% of cumulative free cash flow generated between 2025 and 2027 to investors.
AI Boom Fuels Record Profitability
The massive buyback comes as SK Hynix has reaped windfall profits from surging demand for high-bandwidth memory (HBM) chips, the critical component powering artificial intelligence accelerators used by companies such as Nvidia. The company forecasts annual revenue of approximately 345.6 trillion won and operating profit of about 266.4 trillion won for 2026, representing year-over-year growth of roughly 256% and 464% respectively.
The buyback alone accounts for more than 2% of SK Hynix’s total outstanding shares, a scale the company said was comparable to the proportion of new shares it issued for its American depositary receipt listing on Nasdaq in July. That listing, which raised over $29 billion, was designed to expand SK Hynix’s global investor base and fund new manufacturing capacity.
Stock Price Rebound Strategy
The announcement appears aimed at stabilizing SK Hynix’s share price, which had fallen more than 50% over the past two months amid a broader selloff in technology stocks and concerns about the sustainability of AI-driven chip demand. The buyback signals confidence that the AI memory boom remains in its early stages despite recent market turbulence.
The company said it will pursue a shareholder return expansion to over 50% of cumulative free cash flow generated between 2025 to 2027.
The move follows a broader trend among South Korean conglomerates to boost shareholder returns. Samsung Electronics had previously disclosed plans for a roughly 90 trillion won buyback program, reflecting growing pressure from international investors for better capital allocation in Korean markets, where companies have historically traded at steep valuations compared with global peers.
SK Hynix has been the primary beneficiary of the AI memory boom, supplying HBM chips for Nvidia’s flagship AI processors. SK Group chair Chey Tae-won said earlier this year that a global chip wafer shortage is likely to persist until 2030 as AI-driven demand outpaces manufacturing capacity. The company also announced a $38 billion investment in new fabrication plants in Yongin and Cheongju to expand its production base.
Analysts said the buyback could help narrow SK Hynix’s valuation discount to global semiconductor peers and restore investor confidence after months of share price weakness, even as the underlying business continues to post record results driven by insatiable demand for AI infrastructure.
Sources: Reuters; Bloomberg; CNBC; Korea Economic Daily
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