SK hynix shares tumbled 5.04% during intraday trading on Friday, despite the company announcing a quarterly dividend and plans to enhance shareholder returns. The decline was primarily driven by news that the company's board approved a massive 54.3 trillion won ($38.3 billion) investment to build two new memory chip fabrication plants in South Korea.

The investment, which includes 35.2 trillion won for a second wafer fab in Yongin and 19.1 trillion won for a new M17 plant in Cheongju, sparked concerns over a significant increase in capital expenditure and its potential impact on near-term free cash flow and shareholder returns. While the company positions the expansion as a strategic move to meet surging AI-driven demand for high-bandwidth memory (HBM) and next-generation DRAM, the sheer scale of the commitment prompted a negative market reaction.

The sell-off was compounded by lingering investor dissatisfaction over capital allocation. A recent analysis highlighted that SK hynix's shareholder return policy, which commits 50% of free cash flow, is seen as conservative compared to U.S. rival Micron Technology's pledge to return all excess cash. This sentiment has persisted even as the company announced a 375 won per share dividend and stated it is "actively reviewing" additional shareholder return measures to be finalized in the third quarter. The stock fell despite a bullish call from Morgan Stanley, which noted the memory chip market correction is "nearing its end" and raised its earnings per share estimate for the company.