South Korea‘s two biggest chipmakers are losing a major source of buying support as their share repurchases wind down, putting the focus on whether strong earnings can bring other investors back into the stocks.
Buybacks Losing Market Support
Franklin Templeton portfolio manager Yi Ping Liao said that SK hynix’s greater dedication to returning cash gives it an advantage as corporate repurchases recede. Samsung disclosed a 15 trillion won ($11.2 billion) share buyback in August intended for employee share compensation, while SK hynix rolled out a 40 trillion won program that will cancel all bought shares, permanently lowering the share count.
Samsung’s purchases ended Tuesday, while SK hynix’s program nears completion. The buybacks provided significant market support, with foreign institutions selling a net 21.5 trillion won of Kospi shares in September, individuals 14.2 trillion won, and corporations buying 31.4 trillion won, according to Korea Exchange figures.
With the decline in buyback activity, Samsung announced a preliminary third-quarter operating profit of 107.4 trillion won – a record – representing a 782.5% rise from the prior year, on revenue of 195 trillion won. This sharp increase shifts attention to whether the earnings can lure new investors now that repurchase support is gone.
Earnings and Shareholder Policy Shifts
“The buybacks have clearly helped since they were announced in late August. Both stocks have outperformed the Kospi, and the buying has also helped absorb some of the unwinding in the two-times leveraged single-stock ETFs,” Liao said.
For SK hynix, defending its lead in high-bandwidth memory and maintaining investment discipline are key. Its shareholder policy has already strengthened Liao’s view of the stock. SK hynix plans to return more than 50 percent of cumulative free cash flow for 2025-27, replacing its previous commitment to return within 50 percent.
This adjustment should reassure investors that excess cash will be passed on to them. Samsung has also shown progress, yet it still needs to prove the payoff of projects such as its foundry unit and outline future shareholder promises. The record earnings outlook announced Thursday bolsters its profit narrative, though it leaves longer-term capital-allocation questions unsettled.
Comparing with TSMC and Future Challenges
The difference becomes relevant when measuring the Korean firms against Taiwan Semiconductor Manufacturing Co. Liao points out that investors tolerate TSMC’s sizable capex because of its history of delivering strong returns and a steadier operating model. For memory-chip makers whose fortunes swing with cycles, how capital is allocated matters even more.
SK hynix is closing the trust gap, whereas Samsung still faces challenges as it spreads capital among divisions that yield varying returns. The ultimate trial for both will arise when the memory market slows. Liao warned not to expect SK hynix to duplicate a 40-trillion-won repurchase in each cycle.
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