Samsung shares jump after share buyback announcement

The prospect of a buyback worth trillions of South Korean won has cheered investors after a disappointing year.

The value of Samsung stock rose more than 5% on Monday after the tech firm said it would repurchase around 10tn Won (€9.48tn) of its own equity last week.

The buyback, Samsung’s first since 2017, aims to reinvigorate interest in the stock amid a period of lacklustre demand.

The firm’s share price is down roughly 28% this year, linked to fears that Samsung is losing ground in the artificial intelligence market.

The company is notably falling behind Korean competitor SK Hynix to supply high bandwidth memory (HBM) technology to chipmaker Nvidia.

Third-quarter figures take a fall

Operating profit for Samsung came in at 3.9tn won (€2.6tn) in the third quarter of this year, down around 40% from the previous three months.

The tech giant is also struggling with an excess supply of traditional memory chips and its foundry business is lagging behind TSMC.

Samsung’s foundry business manufactures semiconductor products based on designs from other firms.

Some analysts have additionally suggested that the company’s founding family may be using the buyback programme to solve their own tax issues.

The family has taken out loans to cover inheritance taxes, using their Samsung stock as collateral.

If the stock price drops too much, the family risks a margin call – meaning that the bank may demand additional collateral.

Samsung has denied that the buyback was designed to prevent a margin call, according to the Financial Times.

The company is yet to reply to Euronews’ request for comment.

The share buyback will take place over a one-year period, with Samsung planning to repurchase and cancel three trillion won’ worth of shares in the next three months.