The company also said it plans to allocate more than 50% of the free cash flow generated between 2025 and 2027 to shareholder returns, marking a significant expansion of its capital-return commitment.
The announcement comes as investors press SK Hynix and rival Samsung Electronics to distribute more of the excess cash generated by the artificial intelligence-driven boom in memory chips.
Both companies have reported record profits as demand for advanced memory used in AI systems has surged. However, investors have increasingly called for greater dividends and share repurchases, arguing that strong cash generation should translate into higher returns.
That pressure has grown following a retreat in SK Hynix and Samsung shares from record highs reached in June. Concerns over whether the rapid pace of AI investment can be sustained have weighed on chip stocks, although both companies' shares remain well above their levels earlier in the year.
SK Hynix said its market valuation does not fully reflect the strength of its business.
“Intrinsic value — underpinned by its business competitiveness, robust cash generation capability, and mid-to-long-term growth potential — is not fully reflected in its current stock price.”
Higher shareholder-return target
The chipmaker said it would raise its total shareholder-return target from its previous commitment of “within 50% of cumulative FCF” to “over 50% of cumulative FCF.”
The additional returns will be delivered through a combination of share repurchases, cancellations and dividends.
SK Hynix also said it was considering other ways to increase distributions, including the possibility of special dividends.
Further details are expected to be announced alongside the company's third-quarter earnings, which are likely to be released in late October.
The planned buyback and cancellation of treasury shares could provide additional support for the stock by reducing the number of shares outstanding, while also signalling management's confidence in the company's long-term value.
Cash pile gives company flexibility
SK Hynix's stronger capital-return plans are supported by a substantial cash position. The company said its net cash stood at approximately 69 trillion won at the end of the second quarter of this year.
That financial position gives the chipmaker greater flexibility to reward shareholders while continuing to invest in its business at a time when demand for high-performance memory is being transformed by the rapid expansion of AI infrastructure.
The announcement also comes at an important point for South Korea's semiconductor industry. SK Hynix and Samsung Electronics have benefited enormously from the surge in demand for AI-related memory products, but investors are increasingly focused on whether the companies can sustain their earnings growth and how they intend to deploy the resulting cash.
By committing to return more than half of cumulative free cash flow and announcing a 40 trillion-won treasury-share cancellation, SK Hynix is placing shareholder returns more prominently at the centre of its financial strategy.
The company said additional measures, including potential special dividends, remain under consideration, with investors set to receive more details when third-quarter results are released.