SK Hynix shares surged on Thursday after the South Korean memory-chip giant announced a record $28.6 billion share buyback program.
The move offered investors some relief after the stock fell nearly 10% in the previous session during a broader semiconductor selloff.
SK Hynix shares climbed about 8% to 1.620 million won, recovering from Wednesday’s 9.8% decline. The stock also outperformed the broader South Korean market, with the KOSPI rising sharply after a steep fall in the previous session.
SK Hynix Announces $28.6 Billion Share Buyback
SK Hynix said its board approved a plan to repurchase and cancel 40 trillion won, or about $28.6 billion, of its own shares.
The program will run from August 20 through November 19 and covers approximately 24.07 million shares.
That represents about 3.3% of the company’s total shares outstanding.
According to SK Hynix, the transaction will mark the largest treasury-share cancellation ever carried out by a South Korean listed company.
Buyback Follows Sharp Semiconductor Selloff
The timing of the announcement attracted significant attention.
SK Hynix shares had just suffered one of their steepest daily losses in months as investors questioned whether the artificial intelligence investment boom could continue at its current pace.
Concerns about elevated semiconductor valuations also weighed heavily on the sector.
By launching such a large buyback immediately after the selloff, SK Hynix is signaling confidence in its current valuation and long-term business outlook.
The company said its share price did not fully reflect its intrinsic value, competitive position, and medium- to long-term growth prospects.
Share Cancellation Could Support Earnings Per Share
The decision to cancel the repurchased shares is particularly important for investors.
Unlike shares that are simply held in treasury, cancelled shares are permanently removed from circulation. This reduces the total number of shares outstanding.
If company profits remain stable, fewer shares mean that a larger portion of earnings is attributed to each remaining share.
Over time, this can support earnings per share and shareholder value.
SK Hynix Raises Shareholder Return Target
SK Hynix also increased its commitment to returning capital to shareholders.
The company now plans to return more than 50% of cumulative free cash flow generated between 2025 and 2027.
Previously, its target was to return up to 50%.
The company also indicated that additional shareholder returns could be announced alongside its third-quarter results.
These measures could include further share buybacks, larger dividends, or a combination of both.
Strong Cash Position Supports Buyback Plan
The record buyback comes even as SK Hynix continues investing heavily in production capacity for AI-related memory chips.
The company reported approximately 69 trillion won in net cash at the end of the second quarter.
That strong financial position gives SK Hynix significant flexibility to reward shareholders while continuing to fund expansion and technology investments.
AI Memory Demand Remains a Key Growth Driver
SK Hynix has become one of the biggest beneficiaries of the artificial intelligence investment boom.
Demand for advanced memory products used in AI servers and data centers has supported strong growth across the business.
However, recent volatility in semiconductor stocks shows that investors are increasingly focused on whether AI-related spending can remain strong enough to justify current valuations.
The buyback could help reassure shareholders that management remains confident in the company’s long-term earnings potential.
Semiconductor Companies Face Pressure to Return More Cash
SK Hynix is also responding to broader investor demands for semiconductor companies to return more of the cash generated by the AI boom.
U.S. rival Micron has pledged to return 100% of excess cash to shareholders, while Samsung Electronics has also faced pressure to increase shareholder distributions.
As semiconductor companies generate larger cash flows from AI demand, investors are increasingly expecting a greater share of those profits to be returned through dividends and buybacks.
SK Hynix Buyback Boosts Investor Confidence
The record $28.6 billion SK Hynix buyback has helped restore confidence after a difficult session for semiconductor stocks.
By cancelling roughly 3.3% of its outstanding shares and raising its shareholder-return target, the company is sending a strong message about its balance sheet, cash generation, and long-term outlook.
Investors will now watch SK Hynix’s upcoming earnings, AI memory demand, and any additional shareholder-return announcements for clues about whether the rebound can continue.
