SK Hynix shares rose 1.6% on Friday as the South Korean memory-chip maker considered a potentially large manufacturing expansion in Japan amid strong global demand for memory chips.
The company is weighing plans for a new semiconductor manufacturing facility in Japan’s Miyagi prefecture, with investment potentially reaching tens of trillions of won, according to a Reuters report citing Hankyoreh.
SK Hynix considers major Japan expansion
The proposed facility would expand SK Hynix’s manufacturing footprint into northeastern Japan, which has been designated as one of the country’s semiconductor industry hubs.
SK Group Chairman Chey Tae-won recently visited the region, according to the report.
If the project goes ahead, it would represent the first large-scale semiconductor manufacturing investment in Japan by a South Korean chipmaker.
The potential expansion comes as memory-chip manufacturers look to increase production capacity to meet rising global demand. The proposal would also give SK Hynix a larger manufacturing presence outside South Korea.
Details including the project’s final investment size and construction timeline have not been confirmed.
SK Hynix steps up shareholder returns
The potential Japan investment comes as SK Hynix also increases the amount of cash it plans to return to shareholders.
The company announced a stock buyback plan worth roughly $29 billion this week, describing it as the largest treasury share cancellation ever conducted by a South Korean listed company.
SK Hynix said that it would return more than 50% of free cash flow to shareholders, compared with its previous target of 50%.
The move came only weeks after SK Hynix’s US listing, although its shares have struggled since then.
Samsung raises the stakes
SK Hynix’s domestic rival Samsung unveiled an even larger capital-return program.
Samsung said its board had approved a 2026 shareholder-return plan estimated at 90 trillion won to 110 trillion won ($64.5 billion to $78.9 billion). The company said the program would be five times larger than its previous record payout in 2020 and the largest ever by a Korean company.
Samsung’s shareholder-return policy for 2024-2026 allocates 50% of free cash flow to investors.
The competing approaches highlight the growing focus on shareholder returns among South Korean chipmakers as they benefit from strong demand for memory products.
How SK Hynix could go further
Though Samsung announced a bigger buyback, SK Hynix could still find a way to match it or go higher.
JP Morgan analyst Jay Kwon expects SK Hynix could announce additional shareholder returns when it reports third-quarter results.
Kwon estimates the company could commit to at least 180 trillion won, or just under $130 billion, in additional shareholder returns through 2027.
That would represent about 50% of accumulated free cash flow for 2025-2027 after accounting for existing commitments.
“We cautiously expect SK Hynix to pursue additional shareholder returns through a combination of treasury stock acquisitions, cancellations, and dividends,” Kwon wrote in a research note.
He expects the company to place greater emphasis on special dividends as its current shareholder-return policy runs through 2027.
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