Samsung Electronics Co., the world’s largest smartphone maker and a leading memory chip producer, announced a significant $7.2 billion (10 trillion won) stock buyback program Friday, aiming to boost shareholder confidence amidst concerns about its memory chip business and broader market challenges, Bloomberg reports.
The buyback, one of the largest in the company’s history, will be executed in stages over the next 12 months. The initial phase, commencing Monday, will involve the repurchase and cancellation of approximately $2.1 billion (3 trillion won) worth of shares by February 2025. The remaining $5.1 billion (7 trillion won) will be repurchased according to a plan to be determined by the board.
The move comes as investors express growing apprehension about Samsung’s performance in the memory chip sector. Rival SK Hynix has emerged as the leading supplier of high-bandwidth memory (HBM) to Nvidia, a key player in the booming artificial intelligence market. This has fueled concerns that Samsung, traditionally the dominant force in memory semiconductors, is losing ground in the crucial AI sector.
Further adding to investor uncertainty is Samsung’s exposure to China and the potential impact of protectionist trade policies. The company’s shares, while experiencing an 8.6% surge Friday before the buyback announcement, are still down 32% year-to-date, reflecting the broader challenges faced by the consumer electronics industry. Samsung’s stock currently trades at a discount of over 10% compared to its one-year forward accounting book value.
While Samsung reported progress in October, qualifying and supplying its advanced HBM3E memory chips to Nvidia, with expected sales in the fourth quarter, some investors remain cautious about the company’s long-term outlook.
