Samsung and SK Hynix Face Investor Test as Chip Buybacks Wind Down
As major share repurchase programs near completion, South Korea’s two largest chipmakers must rely more heavily on earnings durability, AI memory demand and capital-allocation discipline to sustain investor interest.
Samsung Electronics and SK Hynix are approaching a new test in the stock market as large share repurchase programs that helped support their shares near completion. With corporate buying set to fade, investors are likely to focus more closely on earnings durability, artificial intelligence memory demand and the companies’ use of capital.
Samsung announced a 15 trillion won ($11.2 billion) repurchase program in August for employee share compensation. Its purchases ended Tuesday, according to local reports. SK Hynix launched a substantially larger 40 trillion won program and said it would cancel all shares acquired, permanently reducing the number of shares outstanding. That program is also nearing completion.
The scale of corporate buying has been a significant factor in the broader market. Korea Exchange figures show that foreign investors sold a net 21.5 trillion won of Kospi shares in September, while individual investors sold 14.2 trillion won. Other corporations, a category that includes company share repurchases, bought a net 31.4 trillion won over the same period.
Franklin Templeton portfolio manager Yi Ping Liao said the buybacks helped both chipmakers outperform the Kospi and absorb some selling linked to the unwinding of leveraged single-stock exchange-traded funds. As that support diminishes, she said the market will need other investors to step in.
Strong results could provide a new catalyst. Samsung on Thursday estimated a record third-quarter operating profit of 107.4 trillion won, up 782.5 percent from a year earlier, on revenue of 195 trillion won. The preliminary figures strengthen the company’s earnings story, but investors are also weighing whether those profits are sustainable through the semiconductor cycle.
For SK Hynix, the key issues include preserving its leadership in high-bandwidth memory, maintaining investment discipline and delivering on shareholder returns. The company plans to return more than 50 percent of cumulative free cash flow for 2025 through 2027, replacing its previous policy of returning within 50 percent. Liao said the stronger commitment and cancellation of repurchased shares make SK Hynix more attractive from a shareholder-return perspective.
Samsung has also improved its direction, but questions remain over returns from businesses such as foundry operations and the shape of its next shareholder policy. Comparisons with Taiwan Semiconductor Manufacturing Co. underscore the issue: investors have generally accepted TSMC’s heavy capital spending because of its record of generating returns and its more predictable business model.
The longer-term measure for both Korean chipmakers will come after the memory market peaks. Returning cash is easier when industry profits are exceptionally strong. Sustaining disciplined investment and shareholder returns during a downturn will be the more demanding test.