SK Hynix Buys Back $28 Billion in Stock as AI Cash Piles Up

SK Hynix, the South Korean company that supplies much of the high-bandwidth memory sitting next to the world's AI chips, said on August 19 that it will buy back and cancel up to 40 trillion won of its own stock, about $28.6 billion. The company called it the largest share cancellation ever announced by a listed Korean firm, and its shares jumped more than 12 percent in Seoul the next day.

The buyback runs from August 20 to November 19 and covers as many as 24 million treasury shares. Alongside it, SK Hynix raised the floor on what it hands back to shareholders, pledging to return more than half of its cumulative free cash flow from 2025 through 2027. Bloomberg put that pledge at roughly $170 billion over the period.

Cash from a memory squeeze

The money is real, and it is coming from AI. Training and serving large models eats memory, and the specialized stacks that SK Hynix makes have been in short supply for over a year. That shortage has flowed straight to the bottom line. The company is generating record cash even as it keeps spending heavily on new plants, having approved about 54 trillion won in fresh fabrication capacity at Yongin and Cheongju earlier in the month.

What makes the buyback interesting is the timing. SK Hynix stock had fallen sharply in the weeks before the announcement, down by half at one point from its peak, as investors started to question how long the hyperscalers will keep spending at current levels. The buyback is, in part, an answer to that doubt. A company that thought the boom was about to end would hoard cash, not return it. Management is signaling the opposite.

That confidence deserves a caveat. Memory is a cyclical business, and it has burned investors before by ramping supply into a downturn. The same demand that lets SK Hynix hand back $28 billion today is the demand a slowdown in AI spending would hit first. The market has already been nervous about whether the buildout is sustainable, a worry we examined when we asked whether the AI bubble is about to burst.

For now, the memory makers are the clearest winners of the AI capital surge, ahead even of the model builders. When Samsung raised foundry prices last week, it was the same story from a different angle: demand for the silicon underneath AI is outrunning supply, and the companies that make it are pricing accordingly. SK Hynix is now returning some of that windfall to shareholders, and betting the windfall lasts.