SK Hynix announced it will buy back and cancel treasury shares worth 40 trillion won (approximately $28.6 billion), and pledged to return at least 50% of free cash flow generated between 2025 and 2027 to shareholders. Following the announcement, SK Hynix's US-listed shares surged over 4% in after-hours trading, after previously falling more than 3%.

The AI memory supercycle dividend is accelerating, and SK Hynix has unveiled its largest-ever shareholder return program.

SK Hynix said on Wednesday that it will buy back and cancel treasury shares worth 40 trillion won (approximately $28.6 billion) and pledged to return at least 50% of free cash flow generated between 2025 and 2027 to shareholders. The company also said it will continue to pursue additional share buybacks and cancellations, and plans to disclose further shareholder return details when third-quarter results are announced.

Following the news, SK Hynix's US-listed shares rose over 4% in after-hours trading, after sliding more than 3% earlier. The stock also erased an 8.3% decline in Korean after-hours trading. As AI chip demand supports the memory price uptrend—though the pace of increases is moderating—this large-scale shareholder return program provides investors with fresh value support and further reinforces confidence in the stock's bottom after peak earnings.

Buyback Details: Aimed at Cancellation, Not Mere Market Support

According to documents filed with regulators, SK Hynix will repurchase up to 24 million treasury shares between August 20 and November 19, with the explicit purpose of share cancellation—not market management or employee incentives.

Per Bloomberg reports, the 40 trillion won buyback constitutes the core component of SK Hynix's 2025–2027 shareholder return framework. The company has committed to returning at least 50% of cumulative free cash flow over the three-year period through dividends, buybacks, and cancellations. The annual fixed dividend has also been raised from 1,200 won per share to 1,500 won.

The confidence behind such a substantial return package stems directly from rapidly growing cash reserves. SK Hynix posted second-quarter revenue of 79.3 trillion won and operating profit of 60.5 trillion won, both record highs. As of the end of Q2, cash and cash equivalents rose to 88 trillion won, up 33.6 trillion won quarter-over-quarter. Borrowings fell to 18.6 trillion won, and net cash expanded to 69.4 trillion won.

Meanwhile, SK Hynix recently raised approximately 39.9 trillion won in additional funds by issuing new ADR shares on the Nasdaq. These proceeds will be prioritized for expansion projects including the Yongin wafer fab, Cheongju advanced packaging facilities, and EUV equipment. Nevertheless, sustained growth in operating cash flow continues to provide ample room for shareholder returns.

Buyback Expectations Had Already Been Building; Samsung May Follow Suit

This announcement did not come entirely as a surprise to the market. According to a Wall Street CN report on August 12, Samsung Electronics and SK Hynix's combined shareholder returns could exceed 200 trillion won (approximately $141.2 billion), potentially setting an all-time high, with plans potentially unveiled by the end of August. At that time, driven by these expectations and news that Singapore's sovereign wealth fund Temasek planned to build direct positions in both companies using its own funds for the first time, both stocks rose about 6% that day, lifting the KOSPI above 6,500 points.

The market had previously anticipated that SK Hynix's shareholder returns could approach 100 trillion won in an extreme scenario. The 40 trillion won buyback announcement represents a phased delivery of that framework, and further disclosures during the third-quarter earnings release remain worth watching.

Bloomberg analysis notes that as memory chip price increases begin to moderate, the logic of relying solely on earnings growth to drive valuations faces challenges. Share buybacks and cancellations directly reduce floating share count, boosting earnings per share and net assets accordingly. Combined with large-scale cash returns lowering holding costs, this helps build a floor under the stock price during the transition period as investors gradually digest peak growth expectations.