SK Hynix announces record $29B share buyback after stock loses half its value

SK Hynix ↗ 4.65% announced on Wednesday that it will buy back and cancel 40 trillion won ($29 billion) worth of its own shares over the next three months — the largest share cancellation program ever by a listed South Korean company. The move came after the memory chipmaker's stock plunged nearly 10% during the Seoul session amid a global chip selloff, but U.S.-listed shares rebounded more than 6% in premarket trading following the announcement.koreajoongangdaily+1

A Record Buyback Amid a Sharp Decline

The company said in a regulatory filing that it will repurchase up to 24.07 million common shares — about 3.3% of shares outstanding — on the open market between August 20 and November 19, then retire all of them. The buyback was calculated based on Monday's closing price of 1,662,000 won per share.koreatimes+1

SK Hynix also raised its shareholder return target, committing to return "at least" 50% of cumulative free cash flow generated between 2025 and 2027, up from a previous pledge of "up to" 50%. Additional details on dividends and further buybacks will be announced alongside third-quarter earnings in October.reuters+1

"Given meaningful free cash flow generation, the company is implementing an early return," SK Hynix said in its filing, adding that its share price "is not fully reflected" relative to intrinsic value.koreajoongangdaily+1

Market Context and Analyst Reaction

The announcement follows a punishing stretch for the stock, which has fallen roughly 49% from a record high of 2,919,000 won reached on June 22. Wednesday's decline was driven by rising U.S. Treasury yields — 30-year yields hit 5.33%, their highest since 2007 — which hammered growth stocks globally. The broader Kospi fell more than 5%, triggering automatic trading halts.investing+2

The buyback plan follows the $26.5 billion SK Hynix raised in its July 10 Nasdaq ↗ 1.10% listing, which came near the peak of market enthusiasm around AI. Rivals Samsung Electronics and Micron ↗ 1.98% face similar pressure to return cash after record profits from AI-driven memory demand.theedgemalaysia+1

"A commitment to its own shares on this scale over the next three months indicates SK Hynix does not think memory pricing is about to roll over," said Josh Gilbert, analyst at eToro.reuters

Balancing Returns and Expansion

SK Hynix reported record operating profit of 60.54 trillion won in the second quarter, with net cash of 69 trillion won — giving it ample room for the buyback. But the company is simultaneously pursuing one of the most aggressive expansion programs in the semiconductor industry, with hundreds of billions of dollars pledged for new facilities in Yongin and Cheongju.moomoo+2

Gary Tan, a portfolio manager at Allspring Global Investments, cautioned that "buybacks may offer a temporary cushion for memory stocks, but the bigger driver remains interest rates. Until long-term yields stabilize, valuation and shareholder return support alone is unlikely to prevent continued volatility."theedgemalaysia