SK Hynix to Repurchase $28.6 Billion of Its Own Shares: A Record in Korean Corporate History
SK Hynix plans to buy back 40 trillion won (approximately $28.6 billion at prevailing exchange rates) of its own stock, marking the largest repurchase ever announced by a listed company in Korea. The board approved this program on Wednesday, with every share bought set to be cancelled outright rather than held in treasury.
Background
The move follows hints of new shareholder-return measures earlier this month, after which the market’s patience for vagueness had worn thin. The buyback will execute on the open market between August 20 and November 19, with SK Securities serving as broker.
Shareholder Returns and Market Performance
SK Hynix reported a surge in second-quarter revenue (79.32 trillion won, up 257% YoY) and operating profit (60.54 trillion won, up 557%), with an impressive 76% operating margin. Despite these record results, the stock fell about 9% on the day.
Investors expressed disappointment over the absence of any payout announcement at the time. The company attributed its decision to reflect the belief that its competitive strength, cash generation, and mid-to-long-term growth potential were not adequately recognized in the current share price.
Financial Health
SK Hynix crossed a trillion dollars in market value in May and peaked near $1.31 trillion in June. Currently, its market cap sits at around $838 billion, representing a 40% decline over two months.
The company boasts substantial net cash of approximately 69 trillion won at the end of Q2 and a negative 26% net debt-to-equity ratio. Full-year capital expenditure guidance targets the high 40 trillion won range, with a recent $38.3 billion approval for new fabs further underscoring its financial capabilities.
Strategic Justification
The buyback funds will also support significant investments in high-bandwidth memory (HBM), where SK Hynix holds a dominant 58% market share against Samsung’s 21% and Micron’s 21%. HBM4 entered mass production in Q2, and around ten customers have signed long-term agreements.
Strong demand driven by AI infrastructure investment and a tight supply environment propelled DRAM average selling prices up about 30% QoQ and NAND prices by the mid-50% range, with DRAM accounting for 73% of Q2 revenue.