The logo of SK hynix is displayed on a glass wall during the 2026 World IT Show in Seoul on April 22, 2026. (Photo: AFP)

South Korean chip giant SK hynix said Wednesday it would buy back a record $28.9 billion of its own shares as it looks to reassure investors as it is battered by growing worries about the AI investment boom.

The company, a key producer of advanced high-bandwidth memory (HBM) chips used to run artificial intelligence tools, has seen its shares soar this year as demand for the semiconductors surged.

But after hitting a peak in June it fell around 50 percent through July amid a flight from the sector fuelled by concerns that the vast sums pumped into it will not see returns as early as hoped, if at all.

While it has enjoyed a bounce this month, it fell 9.8 percent on Wednesday as tech jitters returned and traders fretted over elevated inflation, surging government bond yields and rising oil prices.

After Wednesday's close, the company said its board had approved the plan to buy 40 trillion won worth of shares to boost shareholder returns.

"We have decided to acquire and cancel 40 trillion won worth of treasury shares for efficient capital reallocation and to enhance shareholder value," it said in a regulatory filing, adding that its shares were "undervalued" relative to the company's intrinsic value.

Record profits from SK hynix and its domestic rival Samsung Electronics -- whose advanced memory chips are essential for the fast-evolving AI sector -- have fuelled optimism over South Korea's economic outlook this year.

The gains in the two companies helped propel South Korea's benchmark Kospi index to a record high above 9,000 points in mid-June, before it was dragged by the tech rout.

The buyback comes after SK Group chairman Chey Tae-won purchased about 4.8 billion won of its shares in late July, a move seen as an effort to demonstrate confidence in the company.

The firm said it would continue to "consider further share buybacks and cancellations", taking into account cash flow, market conditions and distributable profits.

It announced last month that net profit soared more than 1,200 in the second quarter thanks to explosive AI demand for its advanced chips.

It also unveiled plans for a five-year agreement to supply $750 billion worth of memory chips to global tech giants including Nvidia.