SK Hynix announced a share-buyback program of up to 40 trillion won, or approximately $29 billion [1, 3].
The move comes as the South Korean memory-chip maker seeks to stabilize its valuation following a recent sell-off in chip stocks. By repurchasing and canceling shares, the company aims to return profits to shareholders and signal that its current stock price is undervalued [2, 3].
The company plans to repurchase as many as 24 million treasury shares [1]. This program is scheduled to run from Aug. 20 to Nov. 19, 2024 [1, 4].
Market reactions were immediate. Premarket share prices rose between 5.56% [6] and approximately six% [7] following the announcement. The buyback is intended to calm investor concerns regarding the sustainability of spending on artificial intelligence [2, 3].
SK Hynix is a primary supplier of high-bandwidth memory used in AI processors. The decision to deploy such a significant amount of capital suggests the company has strong cash flow from its AI-related earnings [8].
The buyback represents a strategic effort to support the stock price during a period of high volatility in the global semiconductor market. The company will cancel the repurchased shares, which reduces the total number of shares outstanding, and typically increases the value of remaining shares [1].
“SK Hynix announced a share-buyback program of up to 40 trillion won.”
This aggressive buyback indicates that SK Hynix believes the market has overreacted to short-term AI spending fears. By committing nearly $29 billion to its own stock, the company is attempting to create a price floor and reassure investors that the long-term demand for AI memory chips remains robust despite recent price swings.
