TradingKey - SK Hynix (SKHY) announced on August 19 that its board of directors has approved a stock buyback plan worth 40 trillion won (approximately $28.4 billion–$28.6 billion). The company plans to repurchase a total of 24.07 million common shares through the open market over the next three months, aiming to cancel the shares and enhance shareholder returns.

Boosted by the news, SK Hynix ADR surged over 8% in overnight trading, turning from losses to gains. As of press time, the stock was trading at $162.48, up about 4.41%.

[Source: Futu]

The company stated that the buyback will commence on August 20 and is expected to last for about three months. According to previous disclosures, SK Hynix aims to expand shareholder returns to over 50% of its free cash flow.

This is the largest buyback plan in SK Hynix's history. In July this year, SK Hynix raised approximately $26.5 billion by issuing American Depositary Receipts (ADRs) in the United States. The size of this buyback is comparable, and the market generally believes this move will offset the equity dilution resulting from the ADR issuance.

Supporting this massive buyback is SK Hynix's sustained profitability in the AI hardware sector. According to its Q2 financial report, SK Hynix achieved single-quarter revenue of 79.32 trillion won, an operating profit of 60.54 trillion won, and a net cash flow of up to 69.4 trillion won, maintaining ample cash reserves.

According to The Korea Times, as the South Korean government advances its "Value-up Program," Samsung Electronics is also expected to announce a new round of shareholder return policies in the third quarter. The industry generally estimates that the potential size of combined medium- to long-term shareholder returns from Samsung and Hynix will reach 300 trillion won.

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