Samsung Electronics has launched a $2.85 billion share buyback to enhance shareholder value amid a 56% Q2 profit drop due to weak AI chip sales and US export curbs. The move, part of a 10-trillion-won program, aims to boost earnings per share and signal optimism despite challenges in the semiconductor market.
Samsung’s Strategic $2.85B Buyback Plan
Buyback Details: Samsung Electronics will repurchase 3.91 trillion won ($2.85 billion) worth of shares, including 56.88 million common shares and 7.83 million preferred shares, as approved by its board on July 8, 2025. This is part of a larger 10-trillion-won buyback program announced in November 2024.
Share Cancellation and Employee Incentives: Of the $2.85 billion, 2.81 trillion won will be used to cancel shares, reducing outstanding shares and boosting earnings per share (EPS). The remaining 1.1 trillion won will support employee compensation and long-term executive incentives, aligning with Samsung’s dual focus on shareholder value and talent retention.
Response to Profit Slump: The buyback follows a 56% plunge in Q2 operating profit, driven by US export restrictions on AI chips to China and inventory writedowns. Samsung’s semiconductor business, particularly its high-bandwidth memory (HBM) chips, has lagged behind rivals like SK Hynix, prompting investor concerns.
Market Reaction: Samsung’s shares rose 0.4% in early trading on July 8, 2025, compared to a 1.5% gain in the KOSPI index. Analysts view the buyback as a near-term catalyst to lift stock sentiment, especially as shares hit a four-year low in late 2024.
Strategic Confidence: The buyback signals Samsung’s optimism about a semiconductor demand recovery in Q4 2025. The company is betting on its Exynos 2500 chip, featured in new smartphones, to revive its logic chip and foundry businesses.
Competitive Landscape: Samsung faces intense competition from SK Hynix and NVIDIA in the AI chip market. Its delayed HBM3E rollout has fueled investor skepticism, but the buyback underscores Samsung’s commitment to reclaiming its tech leadership.
Potential Risks: New US tariffs on electronics and smartphones could further pressure Samsung’s mobile business. Intense competition may also limit its ability to raise prices to offset profit declines.
Disclaimer: This article is based on recent news reports and publicly available information from sources like Reuters, The Korea Times, and posts on X. Data is accurate as of July 8, 2025. Readers are advised to verify details independently before making investment decisions.
