Samsung's 10-Trillion Won Buyback: A Strategic Move to Rebuild Value and Reward Investors

Samsung Electronics' recent completion of its landmark 10-trillion-won share buyback program marks a bold strategic shift in capital allocation, signaling confidence in its undervalued stock and a commitment to boosting shareholder returns. The buyback, which includes a final 3.9-trillion-won tranche announced in July 2025, represents a critical juncture for the tech giant as it seeks to offset near-term headwinds in its semiconductor business and reclaim its position in AI-driven markets.

Capital Allocation: A Dual Focus on Value and Talent

The buyback's structure highlights Samsung's dual priorities: enhancing per-share metrics through share cancellation and retaining talent via employee incentives. Of the final 3.9-trillion-won tranche, 2.8 trillion won will cancel shares, reducing the total outstanding shares and boosting earnings per share (EPS). Meanwhile, 1.1 trillion won will fund employee bonuses, a strategic move to retain talent amid fierce competition in AI chip development and digital health ventures like its acquisition of Xealth.

The cancellation of shares is particularly significant. Historically, Samsung's buybacks have correlated with EPS growth and stock price appreciation. For instance, the first 3-trillion-won phase in late 2024 triggered a 7% stock surge, underscoring investor optimism about reduced dilution. By year-end 2025, the full cancellation of shares from the 10-trillion-won program could lift EPS by an estimated 5-7%, creating a catalyst for further upside.

Market Confidence: A Signal of Undervaluation

Samsung's buyback announcement arrives amid a period of stock underperformance, with shares hitting a four-year low in late 2024 due to concerns over declining semiconductor profits and competition from rivals like SK Hynix. By committing to a buyback of this scale—Samsung's largest in its history—the company is sending a clear message: its stock is undervalued.

The timing is strategic. The final 3.9-trillion-won tranche, executed through October 2025, aligns with Q4 earnings season, when the full impact of share cancellations will be reflected in financial statements. This could prompt a reassessment of Samsung's valuation multiples, particularly in memory chips, where HBM (high-bandwidth memory) demand for AI applications is expected to rebound.

Historical Correlation: Buybacks as a Tailwind for Shareholders

Samsung's buyback history suggests this strategy works. Between 2018 and 2020, a 5-trillion-won buyback program preceded a 30% rise in its stock over 12 months. Similarly, the 2024 announcement reversed a multi-quarter downtrend, with shares gaining over 15% by early 2025. The current program's scale and focus on cancellation over dividends (which dilute control) amplify its potential impact.

Investment Thesis: Positioning Ahead of Q4 Catalysts

Investors should view the completion of the buyback as a near-term catalyst. Key considerations:
1. EPS Boost: Share cancellations will reduce the denominator in EPS calculations, enhancing profitability metrics.
2. Sentiment Lift: A stock at multi-year lows is ripe for a valuation rerating, especially if Q4 semiconductor demand recovers.
3. Talent Retention: Employee bonuses may improve operational efficiency in critical areas like AI chip R&D.

Risks and Considerations

• Semiconductor Cyclicality: Weak demand for memory chips could persist, offsetting buyback benefits.
• Competitor Dynamics: SK Hynix's HBM dominance and U.S.-China trade tensions pose headwinds.
• Execution Risk: The Board's discretion over the 7-trillion-won second phase could lead to uneven buyback pacing.

Conclusion: A Buy Signal for Patient Investors

Samsung's 10-trillion-won buyback is more than a defensive move—it's a proactive strategy to rebuild shareholder value in a challenging market. With shares trading at a 20% discount to their five-year average P/E and a Q4 catalyst on the horizon, investors are well-positioned to capitalize on the EPS tailwinds and sentiment shift.

Actionable Advice: Accumulate Samsung shares (SSNGF) in the coming weeks, targeting a 10-15% upside by early 2026 as cancellations and talent investments take effect. Pair this with a watch on HBM demand and semiconductor inventory data to confirm cyclical recovery.

In a sector rife with volatility, Samsung's buyback signals a return to value discipline—and that's a bet worth taking.