SK Hynix Starts Shareholder Returns That Could Reach $72.5 Billion

$29 Billion Share Buyback to Be Retired

Third-Quarter Cash Dividend May Also Rise

SK Hynix is launching a shareholder return program that could reach about $72.5 billion this year, starting with a $29 billion share buyback and retirement. With this year's operating profit projected to exceed $181.2 billion, the payout to shareholders could amount to roughly seven times last year's $10.4 billion return.

The market is focused on how much more the company can return, given its strong cash generation. Mirae Asset Securities estimates SK Hynix's free cash flow this year at $130.5 billion. Applying the company's shareholder return policy of at least 50% of free cash flow would imply a payout of at least $65.2 billion. Even after deducting the confirmed $29 billion buyback and retirement, about $36.2 billion would remain.

That does not mean the entire amount will be returned this year, because the shareholder return policy is based on cumulative free cash flow for 2025 through 2027. Still, net cash is rising quickly on stronger second-half earnings and inflows from the issuance of American depositary receipts, raising the possibility that the final payout will surpass market expectations.

Brokerages expect additional shareholder return measures, to be unveiled after third-quarter earnings, to follow a two-track approach: higher cash dividends and phased additional buybacks and retirements. Industry analysts view a larger cash dividend as the centerpiece. SK Hynix said on August 19 that it is reviewing increases to both its regular dividend and special dividend. The most likely options are raising the fixed annual dividend from the current $1.09 per share, or $0.27 quarterly, or paying a one-time special dividend.

The company may then move to additional share buybacks and retirements in line with cash accumulated through the fourth quarter and beyond, according to industry expectations.

"The company is likely to first present a larger cash dividend in the third quarter, which offers a more immediate benefit to shareholders, and then continue with additional buybacks and retirements in line with rising free cash flow," an industry official said.

SK Hynix did not disclose new shareholder return details when it reported second-quarter earnings because of restrictions during the 25-day prospectus delivery period after its ADR listing on July 10.

Kim Chae-yeon and Won Jong-hwan, Hankyung.com reporters why29@hankyung.com