Samsung expects shareholder returns up to US$80 billion this year

SAMSUNG Electronics plans to return as much as 110 trillion won (US$80 billion) to investors this year, joining SK Hynix in sharing an AI windfall and putting in motion the largest shareholder return programme in South Korea’s history.

The world’s biggest memory maker will give about half of its free cash flow to shareholders, with 30 trillion won of cash dividends planned for the third quarter, it said in a regulatory filing on Friday (Aug 21). It also aims to buy back about 15 trillion won of stock for employee compensation. Samsung didn’t elaborate on how it would pay out the remainder of the targeted amount.

Samsung’s programme ranks among the largest-ever shareholder return plans. In 2024, Apple approved US$110 billion of repurchases in what was dubbed the biggest US stock buyback ever. Still, Friday’s announcement didn’t include the proportion allocated to share buybacks and cancellations. 

Samsung said the remaining returns will be finalised at a January board meeting. Its shares erased gains and fell as much as 2.6 per cent in post-market trading after some investors found the announcement underwhelming. The won strengthened on Friday, rising as much as 1 per cent.

“Some investors have recently expected up to 150 trillion won of shareholder returns, which explains the post-market share” action, said Kim Minji, a portfolio manager at Must Asset Management.

The moves by the two suppliers of memory to Nvidia – and key architects of the AI build-out – respond to growing investor pressure to share more of the cash generated by the boom.

SK Hynix’s 40 trillion won buyback plan has added pressure on Samsung to return more cash to shareholders, who point to the electronics giant’s swelling reserves. Expectations of a sizeable shareholder return programme have buoyed Samsung’s stock this week.

“This could help spark a broader structural change across the Korean stock market,” said Tom Kang, research director at Counterpoint. “We see this as a solid step towards a more shareholder-focused style of management – much closer to what you typically see in the US market.”

On Friday, Samsung shares gained 3.5 per cent while SK Hynix’s stock climbed 4.4 per cent. The wider market was up 0.8 per cent. Sanjeev Rana, head of research at CLSA Securities Korea, said the shareholder returns should “help set a floor for the share price”, although he said some may have expected the entire package in one go.

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“Also, from a share price perspective, a buyback would have been better as it would have created additional demand for shares in the market,” he said. SK Hynix said this week it will buy back and cancel 40 trillion won of treasury shares and allocate more than 50 per cent of its free cash flow generated between 2025 and 2027 to boost shareholder returns.

“The key question for investors will now be how the remaining capital is returned, rather than just the headline amount,” said Jung In Yun, chief executive officer at Fibonacci Asset Management Global. “In particular, the market is likely to focus on the proportion allocated to share buybacks and cancellations versus special dividends.” REUTERS, BLOOMBERG