Samsung Electronics saw its shares surge over 7% on Monday after the South Korean tech giant announced an unexpected plan to buy back approximately 10 trillion South Korean won ($7.19 billion) worth of its own stock over the next 12 months. The buyback comes as part of the company’s efforts to bolster shareholder value amid challenges in the semiconductor market.
The announcement, revealed in a regulatory filing, outlines that 3 trillion won of shares will be repurchased in the next three months and subsequently canceled. The remaining 7 trillion won worth of shares will be authorized by Samsung’s Board of Directors, which will decide how and when to utilize the treasury shares to enhance shareholder value.
This marks Samsung’s first share buyback since November 2017, according to data from LSEG. The buyback plan arrives at a crucial time for the company, as its stock had hit a four-year low on November 15 following disappointing third-quarter profit guidance and concerns about potential tariff impacts after U.S. President-elect Donald Trump’s election victory.
The buyback news also comes on the heels of Samsung reaching a preliminary agreement with its largest workers’ union, which went on strike in July. This development likely contributed to the 7.21% rally in Samsung shares last Friday, creating a positive momentum that continued into Monday.
However, Samsung faces significant challenges in the semiconductor sector. The company has been trailing behind its key rival, SK Hynix, in the race to supply high-bandwidth memory (HBM) chips—a critical component for AI leader Nvidia. Analysts have noted that Samsung has struggled to close the gap with SK Hynix on the HBM development roadmap.
HBM, a type of dynamic random-access memory (DRAM), is widely used in laptops, workstations, and PCs. In March, SK Hynix became the first chipmaker globally to supply fifth-generation HBM3E chips to Nvidia, according to South Korean media reports.
Despite these hurdles, Samsung’s stock buyback plan is viewed as a strategic move to reassure investors and stabilize its market position. The company’s commitment to enhancing shareholder value, coupled with its ongoing negotiations with its workforce, reflects a multifaceted approach to addressing both internal and external pressures. Analysts will be closely monitoring how Samsung leverages its buyback strategy to maintain investor confidence and navigate the competitive semiconductor landscape.
