SK Group Chairman Chey Tae-won, SK hynix CEO Kwak Noh-jung, and outside director and board chairman Ko Seung-beom, along with other executives, ring the opening bell at the NASDAQ MarketSite in New York on July 10 to mark the launch of SK hynix's American depositary receipt trading. [NASDAQ]
SK Group Chairman Chey Tae-won, SK hynix CEO Kwak Noh-jung, and outside director and board chairman Ko Seung-beom, along with other executives, ring the opening bell at the NASDAQ MarketSite in New York on July 10 to mark the launch of SK hynix's American depositary receipt trading. [NASDAQ]

SK hynix plans to buy back and cancel approximately 40 trillion won ($28.3 billion) worth of its own shares to boost shareholder value — the largest share cancellation ever by a Korean-listed company. The chipmaker also said it would return 50 percent or more of its cumulative free cash flow to shareholders.

The company's board convened Wednesday and approved the share buyback and cancellation plan, which SK hynix then disclosed in a regulatory filing.

SK hynix said it would acquire 24.07 million common shares through open-market purchases, representing approximately 3.3 percent of its total outstanding shares — the largest share cancellation on record among domestically listed companies.

The total acquisition is valued at 40 trillion won. The buyback period begins Thursday and runs for approximately three months, after which all acquired shares will be canceled.

The company also raised its shareholder return commitment, expanding the target from "within 50 percent" of cumulative free cash flow to "50 percent or more."

SK hynix said it plans to pursue share buybacks and cancellations alongside cash dividends, and is also reviewing options to expand dividends, including existing fixed and special dividend structures.

"This decision represents an early fulfillment of our existing shareholder return policy," the company said, adding that it concluded the market had not fully priced in the company's intrinsic value — including its business competitiveness, cash-generating capacity and long-term growth potential.

In November 2024, SK hynix announced a plan to return up to 50 percent of cumulative free cash flow over a three-year period from 2025 to 2027, and said it would consider early returns before the policy's expiration if free cash flow increased meaningfully on the back of improved earnings.

SK hynix has been posting record earnings driven by AI market growth. Its net cash position stood at approximately 69 trillion won as of the end of the second quarter this year.

"Our financial health targets are also progressing smoothly, so we will continue returning value to shareholders while maintaining a stable financial structure," the company said.

SK hynix added that it plans to pursue additional shareholder returns through a combination of share buybacks, cancellations and dividends, taking into account cash flow, market conditions and distributable earnings during the policy period. "The specific scale and method will be announced at the time of the third-quarter earnings release, following board approval," it said.

Meanwhile, criticism of SK hynix's dividend policy has grown in recent months. Despite record earnings, the company has maintained a quarterly dividend of 375 won per share this year, drawing complaints from shareholders that the gains from its earnings improvement have not been adequately passed on through shareholder returns.

Some in the securities industry had warned that without a shareholder return roadmap commensurate with record results, the market might read management's stance as a lack of confidence in the sustainability of the AI boom — potentially eroding investor trust in the company's profit outlook.

A company official said SK hynix had been reviewing its shareholder return plan for some time, but was unable to disclose new information at the second-quarter earnings release because the announcement coincided with a 25-day prospectus delivery period following the ADR listing on July 10. "As soon as that period ended in early August, we convened the board and announced the shareholder return plan as part of our effort to communicate with the market," the official said.


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