Samsung Electronics Announces Share Buyback

SEOUL (Reuters) – Samsung Electronics has decided to buy back shares worth 10 trillion won ($7.17 billion) over a one-year period to boost shareholder value, after shares plunged to more than four-year lows earlier in the week.

This marks the first share buyback for Samsung Electronics (KS:005930) since 2017.

Of the total amount, three trillion won worth of shares—approximately 50.14 million common shares and 6.91 million preferred shares—will be repurchased within the next three months and subsequently canceled, as stated by Samsung after the market closed on Friday.

The board of directors is set to decide on additional measures to enhance shareholder value, which includes determining when and how to utilize the remaining seven trillion won in the repurchase program.

Analysts believe that, in the short term, this decision is likely to positively influence Samsung's share performance; however, tangible business plans are necessary for sustained support of share performance.

As the world's leading memory chip maker, Samsung recently apologized for a disappointing quarterly profit due to its struggles to compete in supplying artificial intelligence chips to Nvidia (NASDAQ:NVDA). In fact, Samsung was the poorest performing stock among major global chipmakers, especially impacted by President-elect Donald Trump's threats of tariffs that could dampen demand for electronics products.

Park Ju-gun, head of corporate analysis firm Leaders Index, commented, "It reflects that Samsung feels a sense of crisis due to the sharp stock drops." He added that the share buyback may be intended to support depreciated stock prices for Samsung stakeholders, including Chairman Jay Y. Lee's family, who have pledged some of their shares as collateral for inheritance tax payments. Recent stock declines risk triggering margin calls from banks for Lee's mother and sisters.

On a positive note, shares of Samsung Electronics surged 7.2% on Friday, marking the largest daily gain since March 2020, despite being down 32% year-to-date and continuing from their lowest level since mid-June 2020.

Note: ($1 = 1,395.3100 won)