Samsung buys back $7 billion worth of stock to regain market position

Shares of Samsung Electronics Co. rose sharply after the South Korea’s largest company announced plans to buy back about 10 trillion won ($7.2 billion) worth of shares over the next year.

Shares of Samsung Electronics Co.

The stock rose 7.5 percent in trading in Seoul on Monday, extending a 7.2 percent gain on Friday when the company’s plans became known. However, the share price has fallen 28% in a year due to concerns that Samsung’s memory chip business is lagging in the market for artificial intelligence technology.

Samsung’s memory chip business is lagging behind in the artificial intelligence technology market.

Share buyback: an attempt to support share price

Analysts predict that the buyback program will be a boost to the stock and will also strengthen the control of the company’s founding family. At the same time, Samsung’s rivals such as SK Hynix Inc. have increased their share prices by 23% thanks to investor interest in their AI chips.

Samsung’s rivals, such as SK Hynix Inc. have increased their share prices by 23% thanks to investor interest in their AI chips.

Analyst at JPMorgan Chase & Co. Jay Kwon said Samsung’s buyout decision was an unexpected and positive move. “The company’s management is showing a proactive approach to prevent the stock price from falling further. However, more important for the long-term outlook will be the restructuring and strategy to regain technological leadership,” he said.

Samsung said.

First phase of the program

In the first phase announced Friday, Samsung plans to buy back about 3 trillion won worth of shares through February 2025. All repurchased shares will be canceled. The remaining 7 trillion won will be distributed after additional board discussion.

According to Clepsydra Capital’s Sangheun Park, the share buyback will help the founding family consolidate control by reducing the number of shares in the external market. It could also reduce their exposure to collateral.

According to Sangheun Pak of Clepsydra Capital.

Inheritance taxes and debt

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Members of Samsung’s founding family use company shares as collateral to pay inheritance taxes. Repayment of the taxes is made in installments. In addition, some family members have pledged shares as collateral for loans, which are subject to margin calls if the share price falls below a certain level.

Some family members have also pledged shares as collateral for loans, which are subject to margin calls if the share price falls below a certain level.

“Local investors have been actively discussing since last week that Samsung may try to raise its share price to address the family’s collateral problem,” Park wrote in a review on Smartkarma. He said the share price is likely to stay above the dangerous 53,000-won mark, below which margin calls could begin.

Samsung’s share price is likely to remain above the dangerous 53,000-won mark, he said.

The company’s current problems

Despite the share buyback initiative, Samsung continues to struggle for leadership with Taiwan Semiconductor Manufacturing Co. in the custom chip business. In addition, the company faces high competition in the smartphone and consumer electronics markets, which are showing weak demand.

Although Samsung recently claimed “significant” progress in making memory chips for AI, experts speculate that there could be changes in the company’s leadership in the near future.

Samsung has recently announced that it is making “significant” progress in creating memory chips for AI, but experts suggest that there could be changes in the company’s leadership in the near future.