Buyback equivalent to about 3.3% of shares outstanding; dividend expansion also under review
SK hynix will buy back and retire KRW 40 trillion worth of its own shares, in what will be the largest treasury-share cancellation by a listed Korean company to date.
The company said Wednesday that its board had approved the buyback and cancellation plan as part of an expanded shareholder-return policy. SK hynix plans to return more than 50% of its cumulative free cash flow (FCF) generated during the 2025-2027 policy period through a combination of share buybacks, cancellations and dividends.
The decision reflects the company’s assessment that its business competitiveness, cash-generating ability and long-term growth prospects are not yet fully reflected in its current share price.
SK hynix has been reporting record earnings as it leads the rapidly growing AI memory market. Its net cash position stood at approximately KRW 69 trillion at the end of the second quarter, highlighting the significant improvement in its cash-generation capacity.
The company plans to spend KRW 40 trillion on the share buyback. Based on SK hynix’s closing share price of KRW 1.662 million on Tuesday, the amount corresponds to approximately 24.07 million shares, or about 3.3% of its 730.49 million shares outstanding.
The buyback is scheduled to begin on Aug. 20 and continue for approximately three months. All shares acquired will be retired once the buyback is completed.
<>Earlier-than-planned execution of shareholder-return policy
The move represents an early implementation of SK hynix’s existing shareholder-return policy.
In November 2024, the company announced plans to return up to 50% of cumulative FCF generated between 2025 and 2027. At the time, it said it could consider accelerating shareholder returns ahead of the end of the policy period if a significant improvement in earnings led to a meaningful increase in FCF.
With its cash flow and financial position improving faster than expected, SK hynix has now raised the target from returning “within 50%” of cumulative FCF to more than 50%.
The company also plans to combine treasury-share buybacks and cancellations with cash dividends. It is reviewing ways to increase dividends, including both its existing fixed dividend and potential special dividends.
The KRW 40 trillion buyback is particularly notable because the shares will be fully canceled rather than retained as treasury stock. The reduction in shares outstanding is expected to enhance per-share value for existing shareholders, assuming other conditions remain unchanged.
SK hynix said it has also been making steady progress toward its financial soundness targets and intends to maintain a stable financial structure while continuing to expand shareholder returns.
<>Additional returns could come after the KRW 40 trillion buyback
The company emphasized that the KRW 40 trillion buyback will not necessarily mark the end of its shareholder-return efforts.
SK hynix plans to consider additional returns during the 2025-2027 policy period, taking into account cash flow, market conditions and legally available distributable profits. The company will determine the specific amount and method through a board resolution and announce further details around its third-quarter earnings release.
The company said it will continue to pursue shareholder returns through a combination of treasury-share buybacks and cancellations and dividends, while balancing these measures with its investment needs and financial stability.
With AI-related memory demand driving strong earnings and cash generation, the latest move signals a significant shift in SK hynix’s capital-allocation strategy, putting greater emphasis on returning excess cash to shareholders while maintaining investment in its long-term growth.
