Samsung Electronics has announced a significant 10 trillion won ($7.2 billion) stock buyback program, one of the largest in the company’s history, aimed at boosting shareholder value.
The repurchase will occur in stages over the next 12 months. Initially, Samsung will buy back about 3 trillion won worth of shares starting Monday, continuing until February 2025. All repurchased shares in this phase will be canceled, effectively reducing the number of outstanding shares. The board will later determine the best approach for buying back the remaining 7 trillion won worth of stock.
The decision comes in the context of growing investor concerns about Samsung’s memory chip business, which is facing tough competition from its rival SK Hynix.
SK Hynix has emerged as a dominant supplier of high-bandwidth memory chips to Nvidia, which uses these advanced chips in its AI accelerators. This has fueled concerns that Samsung, which has historically been a leader in the global memory semiconductor market, is falling behind in the rapidly expanding AI sector.
Samsung’s stock has struggled this year, down 32%, despite a recent 8.6% rise following the announcement of the buyback. The company’s valuation remains at a significant discount, trading more than 10% below its consensus one-year forward accounting book value.
Besides the competitive challenges in the semiconductor market, Samsung is also facing a broader slump in consumer electronics demand globally, adding to investor concerns.
In response to these market pressures, Samsung has been working to qualify and supply its most advanced HBM3E memory chips to Nvidia, with plans to begin sales of these chips in the fourth quarter of this year.
However, some investors remain cautious, noting that it will take time for Samsung to catch up in the high-bandwidth memory space, and are concerned about ongoing trade risks, especially with the company’s exposure to China.
As a result, while the buyback program may provide short-term support for the stock price, long-term growth will depend on how well Samsung navigates these competitive and geopolitical challenges.
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