SK Hynix’s reported KRW 40 trillion ($28.6 billion) share buyback could be one of the biggest catalysts for the stock over the next year. The buyback would cover roughly 3.3% of total shares outstanding. Memory names like $MU $SNDK $STX have already reversed earlier pre-market losses and moved higher. Overall, we expect strong performance from $SKHY, potentially mirroring $SNDK’s rally following its Investor Day. In terms of the buyback, we believe the buyback itself is not entirely a surprise for investors who have been following the company closely. - Back in June, Korean media reported that SK Hynix was considering around KRW 100 trillion in shareholder returns this year, including a KRW 40 trillion buyback. - The company never confirmed it at the time, so some of this was already priced into expectations. - The bigger surprise is the change in its shareholder return framework. - SK Hynix previously aimed to return up to around 50% of cumulative free cash flow over three years. - Under the newly reported policy, it would return at least 50% of cumulative FCF to shareholders. The buyback would also more than offset dilution from its recent ADR issuance. SK Hynix issued around 17.79 million new shares in July for its Nasdaq ADR listing, equivalent to roughly 2.5% of its previous share count. The new plan calls for the repurchase and cancellation of about 24.07 million shares, meaning SK Hynix would still retire a net 6.28 million shares even after fully offsetting the ADR dilution. This would also mark its second major share cancellation this year.