Samsung Electronics and SK Hynix are preparing what could become the largest shareholder return package in South Korean corporate history, with the combined total seen reaching 200 trillion won, or about $141.3 billion at an exchange rate of 1,415 won to the dollar, according to Seoul Economic Daily.
The report said both companies are considering special dividends, treasury share buybacks and share cancellations. A proposal could be presented as early as late August and no later than September, with details expected to be finalized in the third quarter.
The report pushed both shares higher on Aug. 12. Samsung Electronics closed at 255,500 won, up 6.68%, while SK Hynix finished at 1,504,000 won, up 5.54%. The KOSPI ended the day at 6,346.
What is being discussed at each company
For SK Hynix, the reported framework is more concrete. The company is said to be reviewing a package worth about 100 trillion won, made up of 40 trillion won in treasury share buybacks and 60 trillion won in cash dividends.
Samsung's range is wider because its free cash flow this year could reach 200 trillion won. Hana Securities estimated a package of 130 trillion won to 150 trillion won, including roughly 60 trillion won in buybacks and about 70 trillion won in year-end special dividends. KB Securities put the figure as high as 200 trillion won.
Samsung's current annual cash dividend stands at 9.8 trillion won. Based on the broker estimates cited in the report, the new package would amount to 13 to 20 times that level.
AI memory profits are driving the cash build
The financial backdrop for the expected returns is a sharp rise in earnings from AI memory.
In the second quarter, Samsung posted revenue of 171.5 trillion won and operating profit of 89.5 trillion won, the highest among global technology companies for the period. SK Hynix reported revenue of 79.3 trillion won and operating profit of 60.5 trillion won, up 557% year over year, with nearly all of that tied to HBM. Together, the two companies generated close to 250 trillion won in operating profit in the first half.
Cash has also been building quickly. SK Hynix had net cash of 69.4 trillion won at the end of June, up by more than 34 trillion won in a single quarter, against a year-opening target of 100 trillion won. Its July ADR listing in the U.S. brought in another 39.8 trillion won. Outside estimates cited in the report suggest the two companies together could hold $263 billion in net cash by year-end, more than double Nvidia's $102 billion cash position.
Why buybacks are getting more attention than dividends
The timing of the tools matters. Special dividends would not actually be paid until March next year, while treasury share buybacks would create demand in the market as soon as they are executed.
Hana Securities said that makes buybacks more effective than dividends in terms of immediate share-price support. That is one reason the reported plans at both companies put repurchases first.
Shareholder pressure is part of the backdrop
Pressure from shareholders has added to the focus on capital returns. Retail investor group ACT has called on Samsung to carry out a $32 billion treasury share buyback. Foreign institutions, meanwhile, have pushed for the payout ratio on free cash flow to rise from the current 50% to 80%.
Samsung's current policy covers 2024 through 2026 and returns 50% of cumulative free cash flow over the three-year period. SK Hynix uses the same 50% ratio for 2025 through 2027.
Under a conservative 100 trillion won scenario, Samsung's dividend yield would exceed 7%, according to the report. Even so, neither company has formally approved a plan. Both are still saying only that they are reviewing various options.
Stocks had fallen sharply before the rebound
Before the Aug. 12 rally, Samsung and SK Hynix shares had dropped 22.22% and 34.92% in July, respectively. Their combined market-cap weight in the KOSPI had at one point slipped below half, reaching 48.95%.
For now, the 200 trillion won figure remains a market estimate rather than a confirmed amount. Broker projections for Samsung range from 130 trillion won to 200 trillion won, while estimates for SK Hynix fall between 40 trillion won and 100 trillion won.