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Samsung Electronics Co. plans to buy back about 10 trillion won ($7.2 billion) of its own stock over the next year, putting in motion one of the larger shareholder return programs in its history.
Korea's biggest company will repurchase the stock in stages over the coming 12 months, it said in a regulatory filing Friday. As a first step, it will buy back about 3 trillion won of paper starting Monday and up till February 2025, all of which it will cancel. The board will deliberate how best to effect the remaining 7 trillion won of buybacks.
The move coincides with investors' growing concern about the firm's memory chip business, which is struggling to keep pace with SK Hynix Inc. Samsung's smaller rival has become the dominant supplier of high-bandwidth memory to Nvidia Corp., which uses the cutting-edge chips in its popular AI accelerators.
That's fueled fears that Samsung - long the dominant force in global memory semiconductors - is missing out on the artificial intelligence boom. Investors are also trying to gauge its vulnerability to Donald Trump's protectionist trade policy, given its exposure to China. Samsung's shares rose as much as 8.
6 per cent Friday before the buyback announcement, though it remains down 32 per cent on the year. The world's largest maker of smartphones is also grappling with a consumer electronics slump globally. Its stock is trading at a discount of more than 10 per cent to the consensus estimate for its one-year forward accounting book value, according to data compiled by Bloomberg.
In October, Samsung declared progress in qualifying and supplying its most advanced AI memory chips to Nvidia. The Korean company now expects to sell its most advanced HBM3E memory chips in the fourth quarter, Jaejune Kim, executive vice president of Samsung's memory business, said on an earnings call at the time. Still, some investors remain cautious about the outlook.
"A lower valuation is justified given trade risks around Korea and also the catch-up in HBM, which will take time, and a weak memory environment," said Sat Duhra, a fund manager at Janus Henderson Group, referring to high bandwidth memory. "There are better tech stocks to own here "- most of them are in Taiwan.".
