"The Worst Is Behind Us": Announcement of a Record Stock Buyback Sent SK Hynix Shares Up 15%

SK Hynix’s stock soared in Seoul following the announcement of a share buyback and cancellation—a record for South Korean publicly traded companies. JPMorgan Chase, Wall Street’s largest bank, stated that the worst is behind the chipmaker’s stock and advised clients to increase their holdings in the company.

On August 20, SK Hynix shares surged nearly 15% during trading on the Korea Exchange. Shares of its main competitor, Samsung Electronics, rose 10%. The excitement was sparked by SK Hynix’s announcement of a 40 trillion won ($29 billion) share buyback. The company plans to cancel up to 24 million shares and claims this will be the largest share buyback in the history of the South Korean stock market, according to Bloomberg.

Meanwhile, Samsung plans to announce a shareholder payout program totaling more than 100 trillion won following its August board meeting, according to the South Korean publication MoneyToday, citing sources. Such payouts could not only boost the value of South Korea’s most valuable company but also serve as a catalyst for a revaluation of the country’s entire stock market, according to KB Securities analyst Kim Dong-won, as reported by the local publication Maeil Business.

JPMorgan analyst Jay Kwon said that the key aspect of SK Hynix’s announced program was not the size of the share buyback, but rather the revision of its dividend policy. Previously, SK Hynix had pledged to return no more than 50% of its total free cash flow to shareholders for the years 2025–2027. Now, the company has removed the upper limit and intends to distribute more than 50% of its total free cash flow during that period. In addition, it announced the buyback earlier than the market had expected, Kwon added.

According to his estimates, SK Hynix could return at least another 180 trillion won ($130 billion) to shareholders by the end of 2027, in addition to the $29 billion buyback announced the day before. This represents about 16% of the chipmaker’s current market capitalization. Such payouts should support the stock following the recent sell-off, a JPMorgan analyst noted.

“We believe the worst [for SK Hynix] is behind us. We expect investor sentiment toward [the company’s] stock to gradually improve in the medium term, and we recommend accumulating shares,” Kwon wrote.

Even after the recent surge, SK Hynix shares remain more than 40% below their June record high, Bloomberg notes. Earlier this summer, shares of Korean memory chip manufacturers were sold off due to doubts about the sustainability of major tech companies’ spending on artificial intelligence and the threat of competition from Chinese chipmakers.

This article was AI-translated and verified by a human editor