Shares of SK Hynix swung sharply this week as the memory-chip giant unveiled a record KRW 40 trillion ($29 billion) share repurchase and cancellation program, the largest in South Korean corporate history. The stock surged roughly 13% from its August 11 close of KRW 1,425,000 before pulling back 2.9% to KRW 1,613,000 on August 20, the program's first day of execution — a classic "buy the rumor, sell the news" pattern that raises hard questions about how much upside remains. SK Hynix Fires Korea's Biggest-Ever Buyback Bazooka After a 49% Stock Plunge — Is $29 Billion Enough to Close the Valuation Gap?
Shares whipsawed as SK Hynix, the world's dominant supplier of high-bandwidth memory chips for AI, announced a KRW 40 trillion ($29 billion) share repurchase and cancellation — the largest buyback and cancellation ever by a South Korean listed company . The stock, which had already climbed roughly 13% in five sessions from KRW 1,425,000, pulled back 2.9% to KRW 1,613,000 on August 20 as execution began, suggesting investors had partly priced in the news. The stakes are enormous: the chipmaker will repurchase and retire 3.3% of its shares after its stock fell nearly 49% from its June peak .
A Buyback Born From a Brutal Selloff
SK Hynix unveiled the plan to stabilize its shares after they fell more than 50% in two months . Management explicitly stated "the company's intrinsic value — underpinned by its business competitiveness, robust cash generation capability, and mid-to-long-term growth potential — is not fully reflected in its current stock price."
This strategic move is also a response to the structural "Korea discount" — the persistent gap between Korean companies' earnings power and their stock-market valuations.
The Cash Machine Behind the Check SK Hynix can afford the outlay. In Q1 2026 alone, it reported revenues of KRW 52.6 trillion, operating profit of KRW 37.6 trillion, and operating margin of 72% . Net cash stood at about KRW 69 trillion at the end of Q2 . Brokerages expect free cash flow — the money left after all expenses and investments — to surge to KRW 146 trillion this year and KRW 240 trillion next year . The KRW 40 trillion buyback represents barely a quarter of this year's projected free cash flow.
More Could Be Coming — A Lot More
SK Hynix said the buyback would not be the final step, and plans to announce additional shareholder return measures around its third-quarter earnings release . It raised its shareholder return pledge to more than 50% of cumulative free cash flow from 2025 to 2027 — equivalent to about $170 billion — up from a previous target of up to 50% . That subtle wording shift — from "within" to "over" 50% — could unlock tens of trillions of won in additional dividends and buybacks.
AI Dominance Gives the Buyback Teeth
SK Hynix was ranked first globally in high-bandwidth memory by revenue with a market share of 56.4% in Q1 2026 . Demand for its HBM chips over the next three years exceeds its production capacity . That supply-demand imbalance underpins the profit engine funding this buyback — and makes the 49% decline look less like a fundamental crack and more like a valuation gift that management is now aggressively trying to correct.