SK Hynix plans to buy back and cancel more than $28 billion of its shares over the next three months, accelerating its shareholder-return program via what it says would be South Korea's largest stock buyback.
The world's second-largest memory chip maker, which supplies high-bandwidth memory products to Nvidia, said that the planned share repurchase is part of its commitment to return to shareholders more than 50% of its cumulative free cash flow over the three years through 2027.
The shareholder return plan came after SK Hynix's shares fell 9.7% on Wednesday, tracking an overnight retreat in U.S. chip stocks. The stock, a key beneficiary of the artificial-intelligence boom that is driving demand for advanced chips, has more than doubled so far this year despite Wednesday's tumble.
The company said that its intrinsic value--underpinned by its business competitiveness, strong cash generation and mid- to long-term growth potential--isn't fully reflected in its current stock price.
"SK Hynix continues to record record-breaking financial performance, maintaining its leadership in the AI memory market," the company said in a statement.
The company said after the market closed Wednesday that its board of directors had approved a 40.004 trillion won share buyback, equivalent to $28.31 billion, for cancellation.
The planned repurchase of 24.07 million shares, or about 3.3% of total shares outstanding, will run from Aug. 20 through Nov. 19, it said.
SK Hynix also said that it plans to increase shareholder returns, including cash dividends, to more than 50% of cumulative free cash flow for 2025-2027. Previously, the company had pledged to return up to 50% of cumulative FCF to shareholders.
As of the end of the second quarter, the company's net cash stood at about 69 trillion won, it said.
"The size of this buyback is a strong signal from SK Hynix and delivers something investors have been calling for, putting its growing cash pile to work and increasing shareholder returns," said Josh Gilbert, a lead analyst at Etoro.