South Korean chipmaker SK Hynix announced Wednesday it will buy back and cancel 40 trillion won ($28.61 billion) of its treasury shares. The company also disclosed a plan to allocate more than 50% of its free cash flow generated between 2025 and 2027 to shareholder returns, an increase from its previous target of up to 50% of cumulative free cash flow.
The announcement follows a period of decline for SK Hynix shares, which hit record highs in June but fell nearly 10% on Wednesday. Market analysts attributed the recent downturn to investor concerns regarding the sustainability of artificial intelligence (AI) spending by technology companies in the United States. SK Hynix is a primary supplier of high-bandwidth memory chips to Nvidia.
The share buyback program is scheduled to take place between August 20 and November 19, during which the company plans to purchase and cancel as many as 24 million shares. Josh Gilbert, an analyst at eToro, stated the scale of the commitment indicates the company does not anticipate memory pricing to decline soon. The firm's net cash position was reported at approximately 69 trillion won at the end of the second quarter.
For the company's workforce, the move coincides with a 10-year agreement to share 10% of annual operating profit with employees. A source told Reuters that SK Hynix and its labor union are currently finalizing a preliminary wage deal where a portion of bonuses will be paid in shares. This means workers' compensation will be more directly tied to the company's market performance. The firm is also balancing these returns against a multibillion-dollar factory expansion program in South Korea intended to meet surging AI memory demand.
The decision establishes a competitive precedent among major chipmakers. While Micron has pledged to return 100% of excess cash to shareholders, Samsung Electronics has indicated it will announce its own updated return policy "very soon." SK Hynix stated that further details on additional shareholder returns, including potential special dividends or further buybacks, will be released alongside its third-quarter financial results. The current buyback phase is set to conclude on November 19, 2026.