South Korea’s chip giants are buying their own stock at a pace rarely seen, with Samsung Electronics and SK Hynix leading a wave of share repurchases totaling about 10 trillion won, roughly $7.5 billion, according to Korean media reports on Aug. 28. The goal is explicit: to support market confidence as the KOSPI index stalls.
The buybacks come from companies that have made enormous money in the AI memory boom. Both Samsung and SK Hynix have posted record profits as high-bandwidth memory prices surged, and both have signaled they will return a portion of that cash to shareholders. The repurchases are the most direct expression of that commitment.
The timing is tied to the market’s mood. The KOSPI has hovered near the same level for months, with foreign investors selling Korean stocks even as chip earnings soared. The buybacks are intended to absorb that selling and signal that management believes the shares are undervalued, according to analysts who follow the companies.
Samsung’s participation is the most closely watched. The company has long been criticized for conservative capital returns, preferring to hold cash and invest in capacity. Its decision to join the repurchase wave, alongside its smaller but faster-growing rival SK Hynix, marks a shift in how Korea’s largest company treats its shareholders.
The buyback wave extends beyond the two leaders. Other Korean chip and electronics companies have announced repurchase programs, and the total is approaching 10 trillion won across the sector. The concentration in semiconductors reflects the industry’s outsized role in the Korean market, where the two chip giants account for a large share of the index’s value.
The strategy carries risks. Buybacks reduce the cash available for the capacity expansion that the memory industry needs, and both companies are spending heavily on new fabs and packaging plants to meet AI demand. Executives have said the repurchases are affordable alongside that spending, but the tension between returning cash and funding growth is real.
The market’s reaction has been muted so far. Despite the buybacks, Korean chip stocks have continued to drift, and investors say the reason is simple: they want to see the AI memory boom reflected in earnings, not just in buyback announcements. The companies have delivered record profits, but the share price response has been disappointing, a gap that has frustrated management.
The buybacks also have a political dimension. Korean authorities have pressed large companies to return more capital to shareholders, part of a campaign to raise stock valuations and attract foreign investment. The repurchase wave can be read as a response to that pressure, and officials have welcomed the programs publicly.
The pattern of falling short of investor expectations explains some of the frustration. Samsung’s stock has lagged even as its memory business recovered, and SK Hynix’s shares, despite a strong run, have not kept pace with the growth in its profits. Both companies now face the same criticism that has followed Korean conglomerates for years: earnings rise, but the shares do not follow, and buybacks have not yet broken that pattern.
The comparison with Japan is unavoidable. Japanese companies have used buybacks and dividend increases to re-rate their stock market, and Korea’s government has said it wants to replicate that success. Whether buybacks alone can do for the KOSPI what they did for the Nikkei depends on whether the underlying earnings hold up.
The next few quarters will test that proposition. Memory prices are still rising, and both Samsung and SK Hynix have full order books through next year. If earnings continue to climb, the buybacks will have been cheap at current prices. If the AI cycle turns, the companies will have spent billions supporting a falling stock, and the criticism will be loud.
The wave also raises a question about the companies’ confidence in their own share prices versus their need for cash. Both Samsung and SK Hynix have pledged tens of trillions of won in capital spending, and the memory market’s current profits will not last forever. Returning 10 trillion won to shareholders while borrowing to fund expansion would weaken the balance sheet message the companies have been making to investors, and neither has signaled any plan to borrow for the buybacks. The programs are, for now, funded out of the boom’s cash flow.
For now, the message from Korea’s chip leaders is consistent: we are profitable, we are investing, and we believe our shares are too cheap. The 10 trillion won buyback wave is the strongest version of that message the market has heard in years. Whether it moves the index depends on what the memory market does next, and that is a question no buyback can answer. Until then, the buybacks will be watched as a test of whether Korea’s biggest companies have truly changed how they treat shareholders, or merely added a new tool to an old playbook.
