Investing.com — shares rebounded sharply on Thursday after the South Korean memory-chip giant announced a record $28.6 billion share buyback, offering investors some relief after the stock plunged nearly 10% in the previous session amid a broader selloff in semiconductor stocks.
SK Hynix shares rose 8% to KRW1.620 million, recovering from Wednesday’s 9.8% plunge. The stock was also outperforming the broader market, with the up 3.62% at 6,705.23 after tumbling more than 5% in the previous session.
SK Hynix said its board approved a plan to buy back and cancel 40 trillion won ($28.6 billion) of its own shares between August 20 and November 19. The program covers about 24.07 million shares, equivalent to roughly 3.3% of shares outstanding.
The company described it as the largest treasury-share cancellation by a South Korean listed company.
The scale of the move is particularly striking given the timing. SK Hynix shares had just suffered their steepest one-day drop in months as investors questioned the durability of the artificial-intelligence investment boom and the lofty valuations of semiconductor stocks.
By buying back and cancelling shares after that selloff, SK Hynix is effectively signalling that it believes its current valuation does not fully reflect the company’s underlying business strength and cash-generating ability. The company said its intrinsic value, supported by its competitiveness and medium- to long-term growth potential, was not fully reflected in its share price.
The cancellation is also important for investors because it permanently reduces the number of shares outstanding. If profits remain unchanged, fewer shares means a larger portion of those profits is attributable to each remaining share, potentially supporting earnings per share over time.
SK Hynix also raised its shareholder-return target, saying it now intends to return more than 50% of cumulative free cash flow generated between 2025 and 2027, compared with its previous target of returning up to 50%. The company said additional shareholder returns, including further buybacks or dividends, could be announced alongside its third-quarter results.
The buyback comes despite SK Hynix continuing to spend heavily to expand production capacity for AI memory. The company had about 69 trillion won in net cash at the end of the second quarter, giving it substantial financial flexibility to return cash while continuing to invest in its business.
The company is also responding to growing investor pressure for semiconductor manufacturers to return more of the cash generated by the AI boom. U.S. rival has pledged to return 100% of its excess cash to shareholders, while has also faced calls for larger shareholder payouts.