Samsung Allocates $1.73 Billion for Share Buyback to Retain Talent Amid AI Chip War

SEOUL – Samsung Electronics Co. announced on Wednesday that it will repurchase 2.5 trillion won ($1.73 billion) of its own shares, a strategic move designed to strengthen employee compensation schemes as the company fights to regain dominance in the high-bandwidth memory (HBM) market.

The buyback program, scheduled to run from January 8 through April 7, 2026, marks a distinct shift in strategy. Unlike traditional capital returns aimed solely at boosting shareholder value, the company stated in a regulatory filing that these treasury shares are specifically earmarked for a performance-linked incentive plan launched in late 2025.

Compensation as a competitive moat

The move addresses a critical vulnerability: the talent drain. With rivals like Nvidia, SK Hynix, and U.S. tech giants aggressively recruiting semiconductor engineers, Samsung is pivoting to equity-heavy rewards to align its workforce with long-term stock performance.

By purchasing shares on the open market rather than issuing new equity, Samsung avoids diluting existing shareholders while effectively betting $1.73 billion on its recovery roadmap for the 2026-2030 period.

HBM4 and the Nvidia breakthrough

The announcement coincides with a surge in investor confidence. Samsung shares rallied as much as 7.2% this week, touching record highs near 137,000 won. The optimism is fueled by reports that the company has cleared final qualification hurdles to supply next-generation HBM4 memory for Nvidia’s upcoming “Vera Rubin” AI platform.

Samsung’s chip division chief, Jun Young-hyun, recently signaled that the company is preparing to commence mass production of HBM4 in February 2026. If successful, this timeline could allow Samsung to outpace domestic rival SK Hynix, which has dominated the HBM3E cycle.

Earnings forecast to triple

Investors are also positioning for a robust earnings report. Samsung is scheduled to release its preliminary fourth-quarter results tomorrow (Thursday). Analysts forecast operating profit to nearly triple to 17.7 trillion won ($12.2 billion), driven by a 314% surge in prices for DDR5 DRAM.

As the industry diverts manufacturing capacity toward AI-specific chips, a supply shortage for standard “commodity memory” has emerged, allowing Samsung—the world’s largest memory producer—to command exceptional margins on chips used in servers and smartphones.

Brief Summary

Samsung Electronics will buy back $1.73 billion in shares to fund employee incentives, aiming to retain top engineering talent amidst a fierce war for AI expertise. The move comes as the company prepares to reportedly supply HBM4 chips to Nvidia and expects to post a 300% jump in quarterly operating profit due to soaring memory prices.

Frequently Asked Questions (FAQs)

Q1: Why is Samsung buying back shares?

Samsung is purchasing shares to use as bonuses and incentives for its employees. This “stock-based compensation” is designed to stop engineers from leaving for competitors like SK Hynix or Nvidia by giving them a financial stake in the company’s future success.

Q2: How does this affect current shareholders?

It is generally positive. Because Samsung is buying shares from the open market rather than printing new ones, it avoids “dilution” (where existing shares become worth less). It also signals management’s confidence in the stock price.

Q3: What is the ‘Nvidia Breakthrough’?

Reports suggest Samsung has finally passed the tests required to sell its newest AI memory chips (HBM4) to Nvidia. Nvidia needs these chips for its next-generation AI processors (Rubin architecture).

Q4: Why are Samsung’s profits expected to triple?

There is a shortage of standard computer memory (DRAM) because factories are busy making AI chips. This shortage has driven prices up by over 300%, allowing Samsung to make massive profits on every chip it sells.

Q5: What is HBM4?

HBM4 (High Bandwidth Memory 4) is the next generation of memory required for AI. It is faster and more efficient than the current HBM3E standard. Samsung aims to start mass production in February 2026.