Report: Samsung to Announce KRW 100 Trillion Shareholder Return Plan, Allocating 50% of Free Cash Flow to Shareholders

Samsung Electronics is preparing to unveil an unprecedented shareholder return plan, as the AI-driven memory chip supercycle pushes the cash generation capabilities of the world's largest chipmaker to historic highs.

According to a Thursday report by MoneyToday, Samsung Electronics plans to finalize and announce a shareholder return plan totaling over KRW 100 trillion following its board meeting later this month. The company intends to allocate 50% of its free cash flow to shareholder returns, with measures expected to focus primarily on cash dividends. Samsung stated that after announcing the plan, it will continue to consider additional shareholder return measures based on cash flow and profitability conditions.

Samsung is not alone in this move. On Wednesday, SK Hynix announced it would repurchase and cancel treasury shares worth KRW 40 trillion (approximately USD 28.6 billion) and committed to allocating at least 50% of the free cash flow generated between 2025 and 2027 to shareholder returns.

Prior to the announcement, market expectations for large-scale shareholder returns had rapidly intensified. According to previous reports by the Seoul Economic Daily, Samsung Electronics and SK Hynix could announce new shareholder return schemes by the end of August at the earliest, with the combined return scale potentially exceeding KRW 200 trillion, setting a new historical record. Meanwhile, Temasek, the sovereign wealth fund of Singapore, plans to directly invest in the South Korean stock market using its own funds for the first time, aiming to build positions in Samsung Electronics and SK Hynix.

Record-Breaking Performance Supports Return Capacity

The core support for Samsung's anticipated large-scale returns stems from the rapid growth of its free cash flow.

In the second quarter, Samsung recorded revenue of KRW 171.5 trillion and operating profit of KRW 89.5 trillion, both hitting all-time highs. With rising memory prices and sustained growth in demand for high-value-added AI-related chips, the market expects Samsung's annual free cash flow to exceed KRW 200 trillion, with some estimates approaching KRW 250 trillion. Based on a 50% payout ratio, the corresponding shareholder return scale would be approximately KRW 100 trillion to KRW 125 trillion.

Reportedly, Samsung recently held a non-deal roadshow for domestic institutional investors to present its second-quarter results, during which it mentioned formulating shareholder return plans based on free cash flow growth. Some institutions estimated the return scale could even reach KRW 120 trillion.

This plan aligns with Samsung's existing shareholder return policy framework. Under its shareholder return policy for 2024–2026, the company plans to return 50% of its cumulative free cash flow over the three years to shareholders and maintain an annual regular dividend of KRW 9.8 trillion. If funds remain after accounting for regular dividends and other returns, the company will consider additional returns.

At last month's earnings conference, Samsung also stated that the board and management were discussing specific return measures, including special dividends. In terms of return forms, special dividends and share buybacks for cancellation are considered the primary options.

SK Hynix Unveils KRW 40 Trillion Buyback, Sparking Industry-Wide Return Wave

Samsung is not an isolated case. On Wednesday, SK Hynix announced it would repurchase and cancel treasury shares worth KRW 40 trillion (approximately USD 28.6 billion) and committed to allocating at least 50% of the free cash flow generated between 2025 and 2027 to shareholder returns. The company also stated it would continue to pursue additional share buybacks and cancellations, planning to disclose more details when announcing its third-quarter results. Following the news, SK Hynix's U.S. listed shares rose more than 4% in after-hours trading, while its shares in South Korea erased an 8.3% decline in post-market trading.

According to documents submitted by SK Hynix to regulators, the company will repurchase up to 24 million treasury shares between August 20 and November 19, explicitly for the purpose of cancellation. The company's second-quarter revenue of KRW 79.3 trillion and operating profit of KRW 60.5 trillion both set historical records. By the end of the second quarter, cash and cash equivalents rose to KRW 88 trillion, and net cash expanded to KRW 69.4 trillion, providing direct financial strength for large-scale returns. Additionally, SK Hynix has increased its annual fixed dividend from KRW 1,200 per share to KRW 1,500 per share.

The combined return scale of Samsung and SK Hynix amounts to KRW 140 trillion, marking a new magnitude for shareholder returns in the South Korean semiconductor industry.