SK Hynix shares advanced 1.6% on Friday, buoyed by reports that the South Korean memory-chip maker is weighing a substantial manufacturing expansion in Japan. The move comes despite rival Samsung unveiling an even larger capital-return program, underscoring the intensifying competition in the semiconductor sector.
Potential Japan fab
According to a Reuters report citing South Korean newspaper Hankyoreh, SK Hynix is considering building a new semiconductor manufacturing facility in Miyagi prefecture, northeastern Japan. The investment could reach tens of trillions of won, marking the first large-scale chip manufacturing investment in Japan by a South Korean company.
SK Group Chairman Chey Tae-won recently visited the region, fueling speculation about the project. If realized, the facility would expand SK Hynix's production footprint beyond South Korea, aligning with global efforts to diversify chip supply chains. The company has not confirmed the final investment size or construction timeline.
Shareholder returns ramp up
Separately, SK Hynix announced a stock buyback plan worth roughly $29 billion this week, which it described as the largest treasury share cancellation ever by a South Korean listed company. The company also raised its shareholder return target to more than 50% of free cash flow, up from a previous 50% commitment.
The announcement came just weeks after SK Hynix's U.S. listing, although its shares have faced headwinds since then. The buyback is part of a broader trend among memory-chip makers to reward investors amid robust demand for AI-driven memory products.
Samsung raises the bar
Rival Samsung unveiled an even more aggressive capital-return plan, with its board approving a 2026 shareholder-return program estimated at 90 trillion to 110 trillion won ($64.5 billion to $78.9 billion). Samsung said the program would be five times larger than its previous record payout in 2020 and the largest ever by a Korean company. Its policy for 2024-2026 allocates 50% of free cash flow to shareholders.
The competing buyback announcements highlight the growing emphasis on shareholder returns among South Korean chipmakers, a shift that could have broader implications for the sector. For context, the combined buyback wave from Samsung and SK Hynix could influence DRAM-related ETFs.
Room for more
Despite Samsung's larger headline number, analysts see potential for SK Hynix to match or exceed it. JP Morgan analyst Jay Kwon expects SK Hynix to announce additional shareholder returns when it reports third-quarter results. Kwon estimates the company could commit to at least 180 trillion won (just under $130 billion) in additional returns through 2027, representing about 50% of accumulated free cash flow for 2025-2027 after existing commitments.
"We cautiously expect SK Hynix to pursue additional shareholder returns through a combination of treasury stock acquisitions, cancellations, and dividends," Kwon wrote in a research note. He anticipates a greater emphasis on special dividends as the current policy runs through 2027.
The news also comes amid a broader rally in Asian markets, with the Nikkei rebounding on Treasury buyback plans easing bond pressure. Meanwhile, Samsung's record payout reflects the AI memory boom's impact on capital allocation.
As memory demand continues to surge, both companies are balancing aggressive expansion with shareholder rewards. SK Hynix's potential Japan investment and its buyback program signal confidence in long-term growth, even as Samsung's larger payout grabs headlines.
This article is for informational purposes only and does not constitute financial advice.
