SK hynix plans record $28.9bn share buyback

South Korean chipmaker SK hynix said on Wednesday it would buy back and cancel 40 trillion won, or $28.9 billion, of its own shares after a slide in technology stocks and growing investor concern about AI-related spending.

The company said its board approved the plan after the market closed. In a regulatory filing, SK hynix said the buyback was intended for “efficient capital reallocation” and to enhance shareholder value, adding that its shares were “undervalued” relative to the company's intrinsic value.

SK hynix described the plan as the largest such programme ever by a listed Korean company.

The company is a major producer of high-bandwidth memory chips used to run artificial intelligence tools. Its shares have risen this year on demand for those semiconductors, but after peaking in June they fell around 50 percent through July amid concern that heavy investment in AI may not produce returns as early as hoped. The shares fell 9.8 percent on Wednesday as technology jitters returned.

Record profits at SK hynix and Samsung Electronics have supported optimism about South Korea's economic outlook this year. Gains in the two companies helped push South Korea's Kospi index to a record high above 9,000 points in mid-June before the technology selloff dragged the market lower.

The buyback follows SK Group chairman Chey Tae-won's purchase of about 4.8 billion won of SK hynix shares in late July. SK hynix said it would continue to consider further buybacks and cancellations, taking into account cash flow, market conditions and distributable profits.

The company also said last month it planned a five-year agreement to supply $750 billion worth of memory chips to global technology companies including Nvidia.