SK Hynix Accelerates Buyback Program
Shares of SK Hynix surged over 12% in Seoul on Thursday after the South Korean memory chipmaker announced it was accelerating a 40 trillion won ($28.7 billion) share repurchase and cancellation program, according to CNBC. The company also said it was pursuing an expansion of shareholder returns to over 50% of cumulative free cash flow generated between 2025 and 2027.
Peter Lee, an analyst at Citi, said the initiative is expected to serve as a meaningful floor for the share price and provide tangible downside support in the near term. He added that the buyback reflects confidence in the firm’s mid- to long-term growth outlook despite current headwinds in the memory sector. CNBC reported that earlier this month SK Hynix said it would invest 54 trillion won to build new memory chip manufacturing plants amid growing demand for components crucial to artificial intelligence.
Barchart noted that SK Hynix recently announced a roughly $29 billion share buyback plan and intends to return over 50% of its total cash flow from 2025 to 2027 to shareholders. JPMorgan estimated the firm would return at least $130 billion to shareholders. The same outlet reported that SK Hynix posted strong second-quarter results on July 29, with revenue jumping 257% year-over-year to $56.9 billion and operating profit soaring 557% to $43.4 billion. Barchart put the company’s market capitalization at $1.19 trillion and its forward price-earnings ratio at 6.4 times.
On a separate trading day referenced by CNBC TV18 and The Economic Times, SK Hynix shares rose 0.4% while the broader KOSPI index declined. Those outlets placed the KOSPI drop at 1.5% and more than 2% respectively.
Samsung Electronics Shares Retreat on Return Announcement
In contrast, shares of Samsung Electronics fell 8% in early trading on Monday after the company outlined its shareholder return plans, as reported by CNBC TV18 and The Economic Times. Samsung said shareholder returns for the year could reach up to 110 trillion won ($79.4 billion), or range between 90 trillion won and 110 trillion won ($65 billion to $80 billion), including 30 trillion won in cash dividends in the third quarter. The planned returns would be more than five times the previous high of 20.3 trillion won recorded in 2020.
Analysts said the projected returns were smaller than anticipated and that they had expected more details on buyback plans. Sohn In-joon, an analyst at Eugene Securities, said Samsung did not mention the possibility of raising its existing shareholder return policy nor announce a plan to cancel treasury shares that could more directly contribute to a stock price increase. CNBC TV18 reported that Samsung has bought back shares worth 15 trillion won for employee stock bonuses and that its board will decide remaining payouts in January 2027, with cash dividends, share buybacks and share cancellations to be considered. Under its 2024 to 2026 policy, Samsung commits 50% of free cash flow accumulated over the three years to shareholders.
Morgan Stanley described the plan as big capital returns that were slightly below expectations, according to The Economic Times. Sanjeev Rana, head of research at CLSA Securities Korea, said the returns should help set a floor for the share price, though some may have expected the entire package at once and a buyback would have created additional demand for shares.
Wider Tech and Market Moves
CNBC reported that other technology stocks in Asia also rose on the Thursday session that featured SK Hynix’s sharp gain, recovering from prior losses. In South Korea, Samsung Electronics gained 8.69% and Kakao rose 4.41%. In Japan, SoftBank Group advanced 3.79%, Nintendo was over 3% higher and Rakuten added 2.39%. Market sentiment drew support from gains in U.S. stocks after longer-dated Treasury yields pulled back. Tech stocks have experienced heightened volatility in recent sessions.
The Economic Times noted that Asian markets were largely flat on the Monday of Samsung’s decline while oil prices eased, and that Nvidia’s financial results were due later in the week. Barchart observed that SK Hynix stock had been down about 9% over the prior five trading days at one point, with peers Micron and Sandisk also performing poorly.
Analyst Views on Capital Returns
Peter Lee of Citi framed SK Hynix’s accelerated repurchase as both a near-term price support and a signal of confidence in longer-term growth despite sector pressures. By comparison, Eugene Securities’ Sohn In-joon and CLSA’s Sanjeev Rana focused on the structure of Samsung’s announcement, highlighting the absence of an immediate policy increase or share cancellation and the preference among some investors for buybacks that generate market demand. Morgan Stanley characterized Samsung’s overall package as substantial yet modestly short of what the market had priced in.