SK Hynix Inc. unveiled plans to buy back 40 trillion won ($29 billion) of stock and return more of its profits to shareholders in an effort to calm worries about the durability of AI spending.
The memory chipmaker said it will buy back as many as 24 million treasury shares between Aug. 20 and Nov. 19 and cancel them, according to a regulatory filing Wednesday. It also boosted its shareholder return pledge to more than 50% of free cash flow, up from a previous target of within 50%. Its US shares rose as much as 7.1% in pre-market trading.
SK Hynix's buyback plan follows the $26.5 billion it raised just a month ago in a US listing, which came around the height of market excitement around an AI rally. But since then, investors have cooled on the trade and begun demanding a handout.
“The size of this buyback is a strong signal from SK Hynix and delivers something investors have been calling for, putting its growing cash pile to work and increasing shareholder returns,” said Josh Gilbert, an analyst at Etoro. “Lifting the returns target from within 50% of free cash flow to above 50% is the change that will still be relevant long after this week's price action is forgotten.”
Korea continues to be the focus of the Asian tech trade, after an investor frenzy that pushed market values of SK Hynix and homegrown rival Samsung Electronics Co. to more than $1 trillion each. The Korean benchmark Kospi is still posting large daily swings, although the mountain of leveraged trades that drove record levels of volatility has started to unwind.
SK Hynix, a key supplier of high‑bandwidth memory chips to Nvidia Corp., joined a recent selloff over worries that spending on AI hardware could be fleeting. SK Hynix shares declined on Wednesday in Korea before the buyback announcement, tracking losses in US semiconductor and other AI-related stocks as concerns over inflation and rising government debt kept bond yields elevated. The threat of higher borrowing costs is adding to market worries amid ongoing uncertainty over the Iran war.
“Buybacks may offer a temporary ‘cushion' for memory stocks, but the bigger driver remains interest rates,” said Gary Tan, a portfolio manager at Allspring Global Investments. “Until long term yields stabilize, valuation and shareholder return support alone is unlikely to prevent continued volatility.”
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
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