Shares of SK Hynix's U.S.-listed stock (SKHX) surged 13.5% to $14.43 after the South Korean memory chipmaker unveiled a 40 trillion-won (roughly $29 billion) share buyback and cancellation program — one of the largest capital return commitments in Korean corporate history. SK Hynix's Record $29 Billion Buyback Sends Shares Soaring — But Is the AI Chip Giant's Cash Bonanza Sustainable Enough to Reward Investors Long-Term?
Shares of SK Hynix surged 13.5% to $14.43 after the South Korean memory chipmaker announced the largest share buyback and cancellation in Korean corporate history. The board approved a resolution to repurchase and fully cancel 40 trillion won (~$29 billion) worth of its own shares , a move that essentially tells the market: management believes the stock is cheap and is willing to shrink the pool of outstanding shares to prove it. The decision stems from the company's assessment that its intrinsic value "is not fully reflected in its current stock price."
The Biggest Buyback in Korean History Is Just the Opening Act. The repurchase covers roughly 24.07 million shares — about 3.3% of SK Hynix's 730 million total shares outstanding — to be executed over three months starting August 20, with all repurchased shares cancelled afterward. But the buyback is part of a much larger commitment: the company plans to return over 50% of cumulative free cash flow (the cash left after running the business and investing in new equipment) generated from 2025 through 2027.
Compared to last year's total shareholder return of roughly 14.3 trillion won, this new plan represents approximately a sevenfold increase.
AI-Fueled Profits Are Funding the Generosity. SK Hynix continues to post record-breaking financial performance in AI memory, with net cash standing at approximately 69 trillion won as of the end of Q2 2026.
Brokerages expect free cash flow to surge to 146 trillion won this year and 240 trillion won next year , driven by its dominance in high-bandwidth memory chips — the specialized components powering AI data centers. If the company returns at least 50% of cumulative free cash flow as pledged, the total amount available for shareholder returns could exceed 200 trillion won over the period.
A July Disappointment Set the Stage for Today's Pop. On its July 29 earnings call, the company said it would disclose details of its shareholder return program but offered no specifics, sending shares down nearly 10% that day. Today's concrete announcement with hard numbers — buyback size, timeline, and an upgraded payout target — delivered exactly the clarity investors demanded. The 13.5% single-day jump reflects pent-up frustration now converting to relief.
Cyclical Risks Haven't Disappeared. Memory chips remain a boom-and-bust industry. Capital expenditures for 2026 are projected in the high 40 trillion-won range , meaning SK Hynix is simultaneously spending aggressively on capacity while returning cash. If AI demand plateaus or chip prices soften, funding both programs could strain the balance sheet. For now, Wall Street is rewarding the confidence — but the real test is whether these cash flows hold through 2027.