After the "air stepping" AI craze caused a sharp drop in stock prices, Samsung's $7 billion buyback helped the stock price to rebound significantly.

The stock price of South Korea's technology giant Samsung Electronics soared in the early trading session, after the company unexpectedly announced a stock buyback plan worth approximately 100 trillion Korean won (approximately $72 billion) over the next year. Despite the initial surge in Samsung's stock price due to the unexpected buyback announcement, the company's stock has dropped nearly 30% this year, as it missed out on the artificial intelligence boom due to slow HBM development progress, failure to secure supply qualifications from NVIDIA Corporation, and continued low demand for DRAM in consumer electronics. Meanwhile, one of Samsung's biggest competitors in the storage chip industry, SK Hynix, has seen a continuous increase in its stock price since 2024. On Monday, Samsung's stock price rose by about 8% in Seoul stock market trading, rebounding after a 7.2% increase last Friday, following the unexpected buyback announcement. Analysts on Wall Street predict that this buyback could help boost Samsung's long-term struggling stock price, and could also help the founding family strengthen their control over the company. The buyback program, announced after the market closed on Friday, will see Samsung repurchase approximately 30 trillion won worth of shares by February 2025, and then discuss how to best utilize the remaining 70 trillion won buyback allowance. Analyst Jay Kwon from J.P. Morgan wrote in a research report, "The sudden announcement of a buyback has surprised us, and we believe that Samsung's management is actively working to prevent further significant declines in the stock price." The recent buyback plan is seen as a way to help the founding family strengthen their control over the company and potentially address inheritance tax-related loan collateral issues. Despite recent progress in HBM storage systems, Samsung is still lagging behind Taiwan Semiconductor Manufacturing Co., Ltd. (TSMC), the global leader in chip manufacturing, in terms of outsourcing chip production. Samsung is also facing fierce competition from Chinese manufacturers in the smartphone and consumer electronics markets, where demand remains weak. Analysts from Citigroup anticipate a management shuffle by the end of November and expect significant changes in Samsung's chip outsourcing business. As Samsung introduces a new buyback program, it comes at a time when the South Korean government and market regulating bodies are working to provide policy support to boost the country's stock market compared to the overall undervaluation of developed market stocks. In 2017, Samsung announced a buyback plan worth up to 9.3 trillion won, and in 2015, a buyback plan of approximately 11.3 trillion won was introduced. Despite a recent rebound in stock price, Samsung is still facing challenges in catching up with competition in AI and chip manufacturing, while also bracing for potential impact from President Trump's upcoming trade protectionism policies. The company is striving to make progress in its 3nm and below advanced process chip manufacturing dreams, and has fallen significantly behind SK Hynix in the high-performance AI GPU sector, especially in using HBM storage systems bundled with NVIDIA Corporation.There has been hardly any progress in the competition.Artificial intelligence, it can be said, has completely overturned the valuation levels of global chip companies. The overall market value of Samsung is now even less than one-third of Taiwan Semiconductor Manufacturing Co., Ltd., which holds the title of "king of chip fabrication", the core chip outsourcing manufacturer for NVIDIA Corporation and AMD, the two top AI chip giants globally. Just four years ago, Samsung and Taiwan Semiconductor Manufacturing Co., Ltd. were at a similar level in terms of market value. Intel Corporation, once the largest chip giant in the world, integrating chip design, manufacturing, and packaging testing as the world's highest market value chip company, however, Taiwan Semiconductor Manufacturing Co., Ltd. now has a market value nearly 10 times that of Intel Corporation. Jian Shi Cortesi, a portfolio manager at Gam Investment Management in Zurich, stated that on the other side of the huge artificial intelligence divide, recent extremely strong performance results from Taiwan Semiconductor Manufacturing Co., Ltd. and SK Hynix confirm that they are the core beneficiaries in the Asian artificial intelligence field. He also added that the investment fund continues to hold these two chip companies. "Artificial intelligence is a theme that will continue for years. We are still in the very early stages," emphasized the investment manager. The third-quarter performance of the two core manufacturing forces in the global chip industry - ASML Holding NV ADR and Taiwan Semiconductor Manufacturing Co., Ltd. - shows that in this global high-end industry chain valued at up to $530 billion, the performance and stock prices between companies that are riding the unprecedented wave of artificial intelligence enthusiasm and those that are not fully on board with this AI trend are increasingly diverging. Market players are betting with real money on the listed chip companies that are linked to AI, rather than those predominantly focused on non-AI related businesses.