SK hynix has unveiled a 40 trillion won ($28.9 billion) share repurchase and cancellation program, the largest buyback ever announced by a South Korean listed company, as the memory-chip maker seeks to return cash after a sharp decline in its share price.
The company said after the market close on Aug. 19 that it plans to acquire and cancel 24.07 million shares, equal to 3.3% of shares outstanding at the end of the second quarter. The program exceeds the roughly $26.5 billion SK hynix raised through an American depositary receipt issuance in early July.
The announcement also changes the company’s shareholder-return framework. SK hynix replaced its previous commitment to return “up to 50%” of free cash flow with a policy of returning “50% or higher.” That wording gives the board room to distribute more cash during periods of strong operating performance, while avoiding a hard ceiling on buybacks and dividends.
SK hynix said the free-cash-flow calculation used for the policy will exclude non-operating items, including proceeds from the sale of its Kioxia stake, merger-and-acquisition cash outflows, and buybacks related to employee reward shares. The exclusions would make the framework more focused on cash generated by the core memory business rather than one-off corporate transactions.
a larger capital-return commitment
The 40 trillion won purchase plan follows a separate cancellation program announced in February. Together, the two actions cover 39.40 million shares over eight months, including 15.30 million shares disclosed earlier this year and the new 24.07 million-share plan.
JPMorgan described the pace as the most aggressive share-cancellation program among memory-industry peers. Cancelling repurchased shares reduces the number of shares outstanding, which can lift earnings per share for remaining shareholders if profits are maintained.
The scale of the latest announcement is particularly large relative to SK hynix’s recent cash generation. JPMorgan estimated that the buyback represents 63% of trailing 12-month free cash flow, using operating cash flow minus capital expenditures as its measure.
That ratio shows the company is prepared to commit a substantial portion of available cash to capital returns rather than retain all of it for future spending. Memory makers typically require significant investment in new manufacturing capacity and advanced processes, so a buyback of this size places greater weight on management’s confidence in its liquidity and future operating cash flow.
The program was announced after a deep sell-off in SK hynix shares. According to the reports cited by JPMorgan, the stock had fallen 49% from its June 22 high. Over the same period, memory-industry peers declined 26%, while South Korea’s KOSPI index fell 29%.
banks see room for more distributions
JPMorgan forecast 47.5 trillion won in cumulative free cash flow between 2025 and 2027. Applying the company’s revised policy, the bank estimated that SK hynix could have at least 18 trillion won available for further shareholder returns through the end of 2027 after accounting for the newly announced 40 trillion won buyback, at least 4 trillion won in dividends for 2025 and 2026, and the 12 trillion won cancellation announced in February.
Goldman Sachs took a more conservative view of future cash generation, projecting 25.2 trillion won in cumulative free cash flow for 2025 through 2027. Even under that forecast, Goldman Sachs modeled roughly 7 trillion won in additional buybacks beyond the 40 trillion won program and estimated a shareholder-return yield of 8% in 2027.
The difference between the two forecasts reflects uncertainty around the durability of the memory cycle, capital-expenditure requirements, and the cash SK hynix will need to preserve for manufacturing expansion. Yet both banks retained positive ratings after the announcement.
JPMorgan set a 2.75 million won target price, while Goldman Sachs set a 3.5 million won target. Based on the 1.491 million won share price referenced in their reports, those targets implied potential upside of about 84% and 133%, respectively.
JPMorgan also cited valuation metrics of 6.4 times trailing-12-month price-to-earnings, based on adjusted earnings per share, and 3.8 times annualized adjusted earnings per share from the first half of 2026. Those figures frame the buyback as a response to a valuation that the bank viewed as low compared with SK hynix’s earnings capacity.
memory contracts and U.S. listing plans remain in focus
The buyback does not remove the operational questions that will shape the next stage of SK hynix’s valuation. JPMorgan said the market will watch for an update on high-bandwidth memory contract prices by late September, followed by the company’s third-quarter earnings call in late October.
HBM is a specialized type of memory used alongside high-performance processors in artificial-intelligence systems. Pricing and supply agreements for those products could provide a clearer view of future revenue visibility and margins, particularly as customers build large AI computing clusters.
JPMorgan also expects an update next month on the planned listing process for SK hynix’s U.S. subsidiary. Any progress would be closely examined for its implications on the group’s capital structure, financing options, and overseas expansion strategy.
For now, the company’s decision places capital returns alongside manufacturing investment as a central part of its equity story. SK hynix is using the buyback to shrink its share base after a 49% decline, while the revised “50% or higher” free-cash-flow policy leaves open the prospect of further distributions if its memory earnings and cash generation meet management’s expectations.
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