SK Hynix's board has approved a 40 trillion won (about $29 billion) repurchase and cancellation of its own stock, the largest treasury-stock cancellation ever undertaken by a listed South Korean company. Management said the decision reflects its view that the market is pricing the company below its actual worth.

Largest stock cancellation in Korean market history

The chipmaker disclosed the decision in a regulatory filing following a board meeting today, according to SK Hynix's newsroom. All of the repurchased shares will be retired rather than held as treasury stock, permanently shrinking the share count and increasing each remaining shareholder's proportional stake in the company.

Based on the 1,662,000 won closing price in the session before the board vote, the 40 trillion won buyback will acquire approximately 24.07 million shares, or about 3.3% of the 730,492,365 shares outstanding, the filing states.

Purchases begin on August 20 and are scheduled to run for roughly three months, with cancellation to follow once the buying is complete. SK Hynix said the move pulls forward a shareholder-return program first outlined in November 2024, under which the company committed to payouts from 50% of its cumulative free cash flow for 2025 through 2027.

Stock dips in Seoul but trades higher in New York

The two sides of SK Hynix's listing moved in opposite directions after the buyback was announced. In Seoul, the KOSPI-listed shares closed 9.75% lower at 1,500,000 won, down from the previous close of 1,662,000 won, according to MarketWatch figures.

The reaction on Wall Street was markedly different. SK Hynix's American depositary shares traded more than 6% higher before the bell at about $163.98, then hit an early high of $163.80, up 5.25%, once trading opened.

The ADRs began trading on July 10, 2026, and have lost more than 7% since, though Nasdaq data shows a gain of almost 3% over the past month and 3.4% across the last five sessions. The stock has swung between an all-time high of $194.80 and a record low of $124.80.

Demand for the company's chips has increased, but investors have continued to question the valuation. The buyback is the company's answer to that investor pressure, and the cancellation means the cash spent on repurchases will not just sit on the balance sheet as idle treasury shares.

Payout target raised from "within 50%" to "over 50%"

Alongside the repurchase, SK Hynix also lifted its plans for shareholder returns. The target has been changed from the earlier "within 50%" of cumulative free cash flow to "over 50%," according to the company's filing.

Payouts will come through a dual track that pairs buybacks and cancellations with cash dividends, and SK Hynix said it is weighing both fixed and special dividends to further expand distributions.

The company's net cash flow stood at almost 69 trillion won at the end of Q2 2026, which SK Hynix pointed to as evidence of stronger cash generation driven by its lead in AI memory chip manufacturing. The exact scale and timing of any additional returns will be stated after board approval at its third-quarter earnings release, the company said.

As one of the world's biggest producers of DRAM and NAND flash memory, SK Hynix is using a period of strong cash generation to formalize a larger return of capital to shareholders, even as the broader sector continues to face questions about spending cycles and valuation.