SK Hynix’s $1,230 Share Price Spurs Split Talk After $28.9 Billion Buyback

SK Hynix Unveils $28.9 Billion Shareholder-Return Plan

Stock Split Emerges as Next Option With Shares Above $1,230

Chey Tae-won Says Company Would Review Move if Investors Ask

HBM Demand and Memory Prices Seen as More Important Than Liquidity

Analysts are raising the prospect of a stock split as SK Hynix’s next shareholder-return measure after the company announced a 40 trillion won ($28.9 billion) share buyback and cancellation plan. With the stock having traded above 1.7 million won a share, retail investors face a steeper entry cost, fueling expectations that the company could take further steps to improve accessibility and trading liquidity.

$28.9 Billion in Treasury Shares to Be Retired

According to EpicAI, an AI-based investment information platform, SK Hynix closed down 9.75% at 1.5 million won on the Kospi on Aug. 19. Profit-taking hit large semiconductor stocks including Samsung Electronics and SK Hynix as rising global long-term yields weighed on growth valuations and foreign investors sold shares.

The mood shifted after the close. SK Hynix announced a 40 trillion won ($28.9 billion) share buyback and retirement plan, allowing the stock to recoup most of its losses in the Nextrade, or NXT, after-hours market. It ended at 1.624 million won, down 2.29% from the previous day but up 8.27% from the regular-session close.

Lee Jae-won, an analyst at Yuanta Securities, said the move could provide firm downside support and serve as a rerating catalyst because earnings improvement is translating into actual shareholder returns. Fewer shares outstanding through buybacks and retirement would lift earnings per share and lower the price-to-earnings ratio, helping narrow the valuation discount, he added.

SK Hynix plans to acquire 24.07 million common shares on the market and retire all of them. Based on the Aug. 18 closing price of 1.662 million won, the planned purchase totals 40.00434 trillion won ($28.9 billion), equal to about 3.3% of outstanding shares. The acquisition period runs from Aug. 22 through Nov. 19. The company plans to retire the shares within one to two weeks after completing the purchases.

The scale topped brokerage estimates. Hana Securities had forecast SK Hynix’s total shareholder returns this year at 40 trillion won to 60 trillion won, including 20 trillion won to 30 trillion won in share repurchases. With the announced buyback alone reaching 40 trillion won and additional return measures also signaled, total shareholder returns could exceed those earlier projections.

Kim Rok-ho, an analyst at Hana Securities, said the 40 trillion won buyback is clearly positive for shareholders. It came in above the previously expected 20 trillion won to 30 trillion won range for repurchases, and the company has indicated more return policies will be shared, he said.

Shares Above $1,230 Fuel Stock-Split Debate

The stock’s high per-share price has also become a market focus as shareholder returns expand. As of Aug. 21, SK Hynix had closed above 1.7 million won, intensifying investor attention on a possible stock split. Some investors expect that if the company lowers the price of its so-called emperor stock through a split, more investors would be able to buy in, potentially supporting the shares.

A stock split increases the number of shares by dividing existing shares according to a set ratio. For example, if an investor owns one share priced at 1 million won and the company carries out a 10-for-1 split, that investor would then own 10 shares priced at 100,000 won each.

The move lowers the price per share without directly changing corporate value. As the number of outstanding shares rises, the price per share falls by the same ratio, leaving market capitalization unchanged. It can, however, lower the barrier to entry for retail investors and improve trading activity and liquidity.

Chey Tae-won, chairman of SK Group, raised the possibility of a stock split at a press briefing held after an opening event for SK Hynix’s American depositary receipts listing at Nasdaq headquarters in New York in July. Asked whether the company was considering a split to improve retail investor access, Chey said, “If more requests come in, we would of course review it.” Investors took notice because the group’s top decision-maker left the door open.

Eom Su-jin, an analyst at Hanwha Investment & Securities, said a very high per-share price can make buying burdensome for retail investors and keep trading volumes subdued. Lowering the price through a stock split would improve access for individual investors, stimulate trading and expand investor flows.

Samsung Electronics went through a similar process in the past. In May 2018, the company relisted its shares after a 50-for-1 split when the stock had been trading above 2.5 million won a share. The par value fell from 5,000 won to 100 won, and the stock price dropped into the 50,000 won range. On the first day after relisting, Samsung’s trading volume surged more than 100-fold from previous levels, setting a one-day record. An influx of retail investors followed, helping the stock gain a reputation as a national favorite.

A Stock Split Doesn’t Guarantee a Share Rally

A stock split does not guarantee a rise in the share price because it does not change a company’s intrinsic value. Some market participants also argue that splits carry less upside than they once did because investors now have more alternatives, including exchange-traded funds and fractional-share trading.

Hur Jae-hwan, an analyst at Eugene Investment & Securities, said a stock split can have a temporary positive effect because improved access for retail investors tends to increase liquidity. Even so, he said, while a split can boost liquidity, it has little impact on a company’s fundamental value.

An industry official said SK Hynix’s share-price direction is more likely to be driven by earnings fundamentals than by any stock-split effect. Those factors include rising demand for high-bandwidth memory, or HBM, tied to AI data centers, memory supply discipline and whether profitability improves as prices move.

Kang Kyung-ju, Hankyung.com reporter, qurasoha@hankyung.com