Report: Samsung to Announce 100 Trillion KRW Shareholder Return Plan, Company Plans to Use 50% of Free Cash Flow for Shareholder Returns

Samsung Electronics is preparing to launch an unprecedented shareholder return plan, as the AI-driven super cycle in memory chips is pushing the world’s largest chipmaker’s cash generation capability to historic highs.

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

Samsung is not alone. On Wednesday, SK hynix announced that it would repurchase and cancel treasury shares worth KRW 40 trillion (about $28.6 billion), and pledged to use at least 50% of its free cash flow generated from 2025 to 2027 for shareholder returns.

Prior to the announcement, market expectations for large-scale shareholder returns had risen rapidly. According to a previous report by The Seoul Economic Daily, Samsung Electronics and SK hynix may announce new shareholder return plans as early as the end of August, with a combined return scale potentially exceeding KRW 200 trillion, setting a new historical record. Meanwhile, Singapore’s sovereign wealth fund Temasek plans to directly invest in the Korean stock market for the first time with its own funds, intending to build positions in Samsung Electronics and SK hynix.

Record Performance and Cash Flow Underpin Return Potential

The key support for Samsung’s large shareholder return expectations this time comes from the rapid growth in free cash flow.

In the second quarter, Samsung’s revenue was KRW 171.5 trillion and operating profit was KRW 89.5 trillion, both reaching 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 close to KRW 250 trillion. Based on a 50% return ratio, the corresponding shareholder return scale would be around KRW 100 trillion to KRW 125 trillion.

According to reports, Samsung recently held a non-deal roadshow for domestic institutional investors regarding its second quarter results, during which it mentioned that the shareholder return plan would be formulated based on free cash flow growth, with some institutions estimating the return scale at as much as KRW 120 trillion.

The current plan is consistent with Samsung’s existing shareholder return policy framework. According to Samsung’s shareholder return policy for 2024-2026, the company intends to return 50% of accumulated free cash flow over three years to shareholders while maintaining an annual regular dividend of KRW 9.8 trillion. If, after regular dividends, there are still surplus funds, the company will consider further returns.

In last month’s earnings release, Samsung also stated that the board and management are discussing specific return measures, including special dividends. In terms of return forms, special dividends and share buybacks for cancellation are seen as the main options.

Samsung is not alone. On Wednesday, SK hynix announced it would repurchase and cancel treasury shares worth KRW 40 trillion (about $28.6 billion) and committed to returning at least 50% of its free cash flow generated from 2025 to 2027 to shareholders. The company also stated it would continue to pursue additional share buybacks and cancellations, with plans to disclose more details during its third quarter earnings announcement. After the news, SK hynix’s US shares jumped over 4% in after-hours trading, while its Korean shares erased an 8.3% drop post-market.

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, with the clear purpose of share cancellation. In the second quarter, the company’s revenue reached KRW 79.3 trillion and operating profit was KRW 60.5 trillion, both hitting record highs. As of the end of the second quarter, cash and cash equivalents rose to KRW 88 trillion, with net cash expanding to KRW 69.4 trillion, providing direct support for large-scale returns. In addition, SK hynix’s annual fixed dividend was raised from KRW 1,200 to KRW 1,500 per share.

The combined shareholder return scale of Samsung and SK hynix reaches KRW 140 trillion, marking the entry of Korea’s semiconductor industry into a new magnitude of shareholder returns.