SK Hynix to Cancel W40tn Shares, Boost Payouts on AI Memory Demand
SK Hynix recently announced a W40 trillion ($28 billion) share repurchase and cancellation programme. This move significantly increases shareholder returns, driven by strong earnings and cash generation from artificial intelligence memory demand.
Major Share Cancellation Programme
SK Hynix will repurchase and cancel W40 trillion ($28 billion) of its own shares. This programme marks a significant increase in shareholder payouts. The chipmaker plans to begin purchases this week, running for approximately three months. All acquired shares will be permanently cancelled.
This decision follows record earnings and strong cash flow, fuelled by demand for high-bandwidth memory (HBM) used in AI accelerators. The company reported its net cash reached W69 trillion at the end of the second quarter.
Revised Shareholder Return Target
The company also raised its shareholder return target for 2025–2027. It now aims to return more than 50 per cent of cumulative free cash flow (FCF), up from a previous target of within 50 per cent. This share cancellation represents the largest such programme by a listed South Korean company. SK Hynix stated its current share price does not fully reflect its intrinsic value.
The company cited its business competitiveness, strong cash generation, and mid- to long-term growth potential as underlying factors.
Strategic Context and Future Measures
This more aggressive capital return strategy follows growing market pressure for SK Hynix to share its AI memory windfall. The company delayed this announcement until early August, after disclosure restrictions related to its US American Depositary Receipt (ADR) listing expired. SK Hynix had previously outlined a three-year shareholder return framework in November 2024.
Under that policy, it pledged up to 50 per cent of FCF generated from 2025 to 2027. The company is now considering further measures, including larger fixed and special dividends, to be announced around its third-quarter earnings release.
This move demonstrates how AI-driven memory demand is reshaping capital allocation among chipmakers. Traditionally, memory firms maintained large cash reserves for downturns and expansion. Increased HBM demand now provides SK Hynix flexibility for higher payouts while funding advanced memory production. Investors should note this shift towards greater shareholder returns.
It could influence capital allocation strategies across other South Korean technology companies experiencing strong sector-specific demand. Kim Yong-jin, a Sogang University professor, views this as SK Hynix seriously pursuing shareholder returns after market criticism.
This article is journalism, not investment advice; consult a licensed professional before making financial decisions. Market data is indicative, may be delayed, and should be verified with your broker or exchange before use.
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