In less than two months from its peak, shares of South Korean chipmaker SK hynix have tumbled by 48.61%. On August 19, SK hynix (000660.KS) declared a plan to repurchase and cancel treasury shares worth 40 trillion Korean won (approximately 192.8 billion RMB). Additionally, the company outlined a shareholder return policy for 2025 to 2027, committing to return over 50% of its cumulative free cash flow to investors during this period.
From the start of the year to its high on June 22, SK hynix's stock had soared by 349.23%. However, the subsequent correction has been sharp, with the stock shedding 48.61% in under two months and dropping another 9.75% today. The company's depositary receipts listed on Nasdaq (SKHY.O) also fell 9.2% on August 18, bringing its market capitalization to $1.11 trillion.
In a press release, SK hynix stated that its board of directors approved the share buyback and cancellation proposal and announced the shareholder return plan. The company noted that these decisions reflect its intrinsic value, including business competitiveness, cash generation capabilities, and mid-to-long-term growth potential, which it believes are not adequately reflected in the current stock price. Following the announcement, SK hynix's U.S.-listed shares surged over 5% in pre-market trading on August 19.
This move was anticipated, as SK hynix had hinted at new shareholder return measures earlier. On August 7, the company said it was actively reviewing additional options, with details expected to be finalized and announced in the third quarter. On the same day, SK hynix also disclosed a quarterly dividend plan, proposing a payout of 375 Korean won (about 1.8 RMB) per common share, representing a 0.02% yield based on market price. The total dividend amounts to 273.325 billion Korean won (about 1.3 billion RMB), with the record date set for August 31 and payment due within a month thereafter.
There is precedent for memory makers seeing their stock prices stabilize after adjusting shareholder return policies. For instance, SanDisk (SNDK.O) projected at its investor day on August 13 that its revenue growth rate for fiscal years 2028 to 2030 would be between 15% and 19%, with a non-GAAP gross margin of approximately 80% and an adjusted free cash flow margin of about 50%. SanDisk also committed to distributing all remaining cash to shareholders after fully funding business investments. After hitting a peak of over $2,300 per share in June, SanDisk's stock fell to around $1,015 in early July. However, following the announcement of its shareholder return plan, the stock rallied for three consecutive days, gaining over 30% in total.
Beyond its shareholder return program, SK hynix also has an employee performance bonus system in place. After reaching a new labor agreement last September, the company established a framework at its headquarters level to distribute annual performance bonuses, funded by 10% of its operating profit. In 2025, SK hynix recorded revenue of 97.1467 trillion Korean won, an increase of over 30 trillion Korean won year-over-year, and operating profit of 47.2063 trillion Korean won, which doubled from the previous year, marking its best annual performance ever. Based on the approximately 35,000 employees at the end of last year, the average bonus per person could be around 140 million Korean won, equivalent to roughly 650,000 RMB.
SK hynix's memory chips include DRAM and NAND flash. According to the latest forecast from TrendForce, among the top NAND flash brands listed in the second quarter, the top five manufacturers saw their combined revenue grow by 77% quarter-over-quarter, reaching $68.87 billion. SK hynix recorded $14.27 billion in revenue, ranking second only to Samsung. Nevertheless, concerns persist in the market about whether memory makers can sustain such rapid earnings growth. At the end of July, SK hynix released its second-quarter results, posting revenue of 79.32 trillion Korean won (about 369.6 billion RMB), up 257% year-over-year, and operating profit of 60.54 trillion Korean won (about 282.1 billion RMB), up 557%. Despite the explosive growth, the quarterly operating profit fell short of market forecasts of approximately 64 trillion Korean won, and revenue missed expectations of around 84 trillion Korean won.
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