South Korea’s semiconductor boom is triggering an unprecedented shift in how companies return cash to investors, putting SK Group Chairman Chey Tae-won at the center of a transformation that could make Korean stocks more attractive to U.S. investors and help narrow the country’s long-standing “Korea discount.” SK hynix’s record share buyback and cancellation, followed days later by Samsung Electronics’ massive shareholder-return plan, are turning profits from the artificial-intelligence boom into direct payouts to investors.
SK hynix on Aug. 19 approved a plan to repurchase and cancel 40 trillion won, or about $28.6 billion, of its own shares, the largest such transaction by a South Korean listed company. The company will buy about 24.1 million shares, equivalent to roughly 3.3% of its outstanding stock, and cancel all of them. It also raised its shareholder-return target to more than 50% of cumulative free cash flow through 2027, from a previous ceiling of 50%.
The move is notable because Chey, who serves as SK Group chairman and an unregistered chairman of SK hynix, had argued just a year ago that companies should retain flexibility over their treasury shares.
At a press conference during the Korea Chamber of Commerce and Industry’s summer forum in August 2025, Chey questioned whether companies would continue buying back shares if lawmakers required them to cancel treasury stock. “If you reduce freedom, the incentive to buy back shares could actually decline,” he said at the time.
His position reflected a long-standing concern among South Korean conglomerates: Treasury shares can provide companies with flexibility to manage liquidity and defend against hostile takeovers.
Chey has particular reason to value that flexibility.
In 2003, hedge fund Sovereign invested 176.8 billion won, or roughly $127 million, to acquire a 14.99% stake in SK Corp. It then sought Chey’s removal and challenged his control of the company. Chey narrowly retained control after a shareholder vote the following year. Sovereign sold its stake about 28 months after its initial investment, reportedly making a profit of roughly 850 billion won, or about $610 million.
The episode left a lasting mark on SK’s corporate strategy. SK Corp. eventually raised its treasury-stock holdings to about 24%. Critics said the structure contributed to the Korea discount, while SK viewed the holdings as a defense against outside attempts to challenge its control.
SK hynix’s latest decision represents a sharp departure from that history.
Rather than retaining treasury shares as a defensive tool, the company plans to eliminate them entirely and use the transaction to increase the value of the shares that remain outstanding. For investors, the move is especially significant because share cancellations permanently reduce the number of shares in circulation, increasing the ownership and earnings claim represented by each remaining share.
The timing is also significant. SK hynix has been generating substantial cash as demand for high-bandwidth memory used in AI data centers surges. The company is one of the key beneficiaries of the global AI infrastructure investment cycle, making its decision to return a larger portion of that cash particularly relevant to investors in U.S. technology stocks.
Two days after SK hynix’s announcement, Samsung Electronics unveiled a shareholder-return program worth as much as 110 trillion won, or roughly $79 billion. Samsung disclosed 30 trillion won in cash dividends while leaving the details of additional returns to dividends, buybacks and cancellations.
Samsung’s announcement means the two largest Korean chipmakers are now putting shareholder returns at the center of their capital-allocation strategies.
For U.S. investors, the development offers another way to participate in the AI semiconductor boom. Investors already exposed to companies such as Nvidia and Micron Technology can also look to Korean memory-chip companies for exposure to AI demand, potentially combined with higher shareholder payouts and a rerating of historically discounted Korean equities.
The broader question is whether SK hynix’s move marks a lasting change in Korean corporate behavior or simply reflects an unusually profitable period for the semiconductor industry.
South Korean companies have historically been criticized for complex ownership structures, large cash balances and relatively low shareholder payouts compared with U.S. and other developed-market peers. Treasury shares have often been viewed as strategic assets that could be used for corporate-control purposes rather than as capital to be returned to investors.
Chey’s own evolution highlights the significance of the current shift.
The SK chairman warned in 2025 that forcing companies to cancel treasury shares could discourage future buybacks. Yet SK hynix, under his leadership, is now committing to one of the largest share cancellations in global corporate history.
The change reflects a different calculation. As AI-driven memory demand generates extraordinary profits, retaining large amounts of cash or treasury shares may carry a higher opportunity cost than returning capital to shareholders.
SK hynix is also raising its shareholder-return target to at least 50% of cumulative free cash flow through 2027. That effectively removes the previous upper limit and gives investors a larger claim on future cash generation.
The strategy carries a trade-off. Semiconductor companies need enormous amounts of capital for new manufacturing capacity, advanced packaging and next-generation memory. Returning more cash to shareholders could limit financial flexibility if the AI infrastructure boom requires another wave of investment.
For Chey and SK hynix, however, the message to investors is increasingly clear: the company intends to capture the AI boom not only through higher earnings, but also through a larger direct share of those earnings for shareholders.
If Samsung and other major Korean companies follow, the impact could extend beyond individual stocks. Higher buybacks, permanent share cancellations and stronger capital-return policies could help narrow the valuation gap that has long separated Korean equities from their U.S. and other developed-market peers.
For investors, the question is no longer simply whether Korean companies will buy back their shares. It is whether Chey Tae-won’s SK hynix has started a broader race among Korean companies to return the AI windfall to shareholders.
