Sk Hynix accelerates shareholder remuneration and puts on the table 40 thousand billion won, approximately 25 billion euros, for to buy back and then delete own actions. By size, it is the largest program of buyback and cancellation of treasury shares, the largest ever achieved by a South Korean listed company. The semiconductor giant also raises the bar on overall remuneration, aiming to return more than 50% of free cash flow to shareholders cumulative generated in the period 2025-2027, against the previous target of a maximum of 50%.
The decision comes after a sharp downsizing of the title, which in recent weeks has lost almost half of its value from its June highs. The buyback plan aims to stabilize the stock and reassure the market: in pre-market trading negli United States, SK Hynix shares rose as much as 7,1% after the announcement.
SK Hynix Stock Price Crashes: What's Happening to the Stock?
Even before the announcement of the buyback, however, the day was Alone had been particularly heavy for the entire technology sector. Wednesday Sk Hynix lost as much as 9,8% during the session, closing at 1,5 million won. Compared to the record of 2,919 million won on June 22, the stock is now down 48,6%. But the movement did not only concern the memory manufacturer: the Kospi ended up losing more than 6%, before closing down 5,8%, while the Kospi 200 lost 6,41%. Samsung Electronics It was hit by the selloff, like other major Asian semiconductor companies. The South Korean stock exchange even activated the so-called "sidecar," a temporary suspension of trading on automatic selling programs, after the index's sharp move.
Upstream there is the new semiconductor sell-off on Wall StreetThe Philadelphia Semiconductor Index lost 5,6%, with Micron down 7% and Nvidia down 2,3%. Investors don't appear to have lost faith in AI, but they are becoming more selective: after the sector's enormous gains, the market is eager to see whether Big Tech's massive investments will generate sufficient revenue and profits to justify such high valuations.
Making the picture even more difficult was the sharp rise in US government bond yieldsThe yield on the 30-year Treasury note reached 5,34%, its highest level since 2007, while the yield on the 10-year note approached 4,72%. Higher yields increase the cost of borrowing and make stocks with very high growth expectations, such as technology stocks, less attractive to investors. Fears of theinflation,'increase in public debt and geopolitical tensions linked to the war with Iran.
The sell-off also reflects a more specific question: how long can the AI investment boom last? SK Hynix and Samsung are among the main stocks investors are using to bet on the AI boom, and as such, they are particularly exposed when the market begins to question the sustainability of the sector's valuations. Volatility has also been amplified by the high level of leverage, which in downturns can turn selling into a spiral of liquidations.
SK Hynix's $40 trillion buyback: How it works
It is against this backdrop that SK hynix has decided to accelerate the return of capital to shareholders. The board of directors has approved a program that will start on August 20th and end on November 19thThe company will buy back approximately 24,07 million shares on the market, equal to 3,3% of the outstanding capital, and then cancel them entirely.
The amount was calculated on the basis of Monday's closing price, equal to 1,662 million won. This is therefore an estimate: the actual number of shares purchased and the final transaction amount may vary depending on the stock price during the buyback period. If the entire planned amount is canceled, the outstanding shares will decrease to 706,42 million. The cancellation reduces the number of shares participating in profits: for the same profits, it therefore increases the share of profit attributable to each share and supports the value of existing shareholders' holdings.
The decision comes as the business continues to benefit from the strong demand for high-performance memory used in systems of artificial intelligence. SK hynix posted a record operating profit of 60.540 trillion won in the second quarter and had approximately 69 trillion won in net cash at the end of June. The company said it accelerated its capital distribution in part because it believes that the price of the title does not reflect completely its value intrinsic, supported by the competitiveness of the business, the ability to generate cash and the growth prospects in the medium to long term.
SK hynix increases dividends and shareholder compensation
The buyback is part of a broader plan of remuneration. SK hynix increased the share of its cumulative free cash flow for the period 2025-2027 allocated to shareholders from “up to 50%” to “over 50%” through share buybacks and cancellations but also dividends ordinary and special. According to estimates by some investment banks, the overall package could reach approximately 100 trillion won, taking into account the 40 trillion won buyback and approximately 60 trillion won in potential dividends. Further details, including any new buybacks, will be communicated with the third quarter results, expected in October.
The timing is also significant because the maxi-buyback comes just a month after the listing in the United States, with which SK Hynix raised approximately $26,5 billion. The plan was not announced alongside the second-quarter results, partly because, following the ADR listing on July 10, the company had to comply with a 25-day deadline to submit the prospectus to investors, which made it more difficult to disclose new information. Now, the company is trying to send a clear message to investors: demand for AI-related chips continues to support the business, but a portion of the liquidity generated by growth is being immediately returned to shareholders, just as the market is once again questioning the company's ability to deliver its AI-related chips. sustainability of the artificial intelligence boom.
