SK hynix has decided to return cash built up from record earnings to shareholders. The company said on Tuesday its board approved an agenda item to buy back 40 trillion won of its own shares and cancel all of them. It also disclosed a shareholder return plan. The planned purchase period runs from Aug. 20 for about three months. All shares bought back will be cancelled after the purchase ends.

The company said it made the decision because it judged that its intrinsic value, including business competitiveness, cash generation and mid- to long-term growth prospects, is not sufficiently reflected in the current share price. SK hynix has continued record earnings in the artificial intelligence (AI) memory market. Net cash stood at about 69 trillion won as of the end of the second quarter this year, and its cash generation also improved.

The planned amount for the share buyback totals 40 trillion won. Based on the previous day's closing price of 1,662,000 won per share before the board resolution, that corresponds to 24,070,000 shares. It is about 3.3 percent of the total 730,492,365 shares outstanding. The company plans to cancel all shares after the buyback ends. The 40 trillion won plan is the largest share cancellation case among South Korean listed companies.

Previously, as of November 2024, SK hynix announced it would carry out shareholder returns within a range of 50 percent of cumulative free cash flow (FCF) over the next three years. It defined the measure as cumulative surplus cash flow remaining after subtracting costs and investment from what the company earned. It also said at the time it would consider early returns even before the policy expires if FCF increases meaningfully due to improved results. The policy period runs from 2025 to 2027.

With this disclosure, the shareholder return scale will be pushed up from within a range of 50 percent of cumulative FCF to 50 percent or more. It will also use a combination of share buybacks and cancellations and cash dividends. It will also review measures to expand dividends, including existing fixed dividends and special dividends. The company said its financial soundness goals are also being met smoothly and it plans to continue shareholder returns while keeping its financial structure stable.

An SK hynix official said, "During the policy period, we plan to pursue additional shareholder returns in a way that combines share buybacks and cancellations and dividends, taking into account cash flow, market conditions and distributable profit. We plan to provide guidance on the specific scale and method at the time of the third-quarter earnings announcement after a board resolution."