SK hynix is approaching a pivotal decision on shareholder returns. The world's leading memory chipmaker confirmed on Monday that it will announce shareholder return measures alongside its third-quarter earnings report on Wednesday, with widespread expectations that these will include a special dividend of up to 16 trillion won (approximately $12.1 billion).
According to a report citing investment banking sources, the special dividend would be funded by proceeds from SK hynix (KRX: 000660) selling its stake in Japanese memory chip manufacturer Kioxia. It is estimated that SK hynix fully liquidated its Kioxia holdings during the first and second quarters of this year, generating combined net profits of approximately 20 trillion won (around $15.1 billion) after deducting the original investment cost. The proposed 16 trillion won special dividend would represent roughly 80% of those net profits.
When questioned by the stock exchange operator about the report, SK hynix stated it is "reviewing various shareholder return measures" and plans to disclose them together with its quarterly results on Wednesday.
The news lifted market sentiment. On Monday, SK hynix shares rose more than 2% at one point, bucking the broader market trend, while the KOSPI index fell over 1% during the same period. The statement also reflects the growing pressure on the company to deliver shareholder returns, set against a backdrop of soaring AI memory chip profits but a significant stock price correction.
Kioxia Exit: A Six-Year Investment Comes Full Circle
The funding source for this special dividend traces back to SK hynix's six-year strategic investment in Kioxia.
In 2018, Bain Capital led a consortium of American, Japanese, and Korean investors to acquire Toshiba's memory business, which later became Kioxia. SK hynix invested approximately 4 trillion won in total through two special purpose companies (SPCs), purchasing Kioxia shares and convertible bonds respectively.
As Bain Capital gradually sold off the final batch of Kioxia shares this year, SK hynix also completed its full exit from the company. According to Reuters, SK hynix has not publicly disclosed specific details of the equity sale, but analysts estimate the company has recognized substantial cumulative investment gains. Media reports citing informed sources indicate that combined net profits over the two quarters reached approximately 20 trillion won (around $15.1 billion).
If the final special dividend reaches the reported 16 trillion won, it would represent about 80% of those net profits, signaling management's intention to return the vast majority of exit proceeds directly to shareholders.
Shareholder Pressure: Return Demands Amid AI Windfall
SK hynix's response to the special dividend rumors comes amid mounting pressure from investors.
As a core supplier to Nvidia, SK hynix and Samsung Electronics have both benefited from surging demand for AI memory chips, with profits reaching record highs at one point. However, SK hynix shares have fallen sharply since hitting an all-time high in June, partly due to investor concerns about the sustainability of AI capital expenditure by U.S. technology companies, further intensifying market expectations for increased cash returns.
SK hynix has already taken a series of shareholder return measures. In August, the company announced it would buy back and cancel 40 trillion won worth of its own shares, and committed to allocating more than 50% of free cash flow generated between 2025 and 2027 toward enhancing shareholder returns.
Meanwhile, SK hynix announced last Friday that it had suspended the planned U.S. listing of its chip subsidiary Solidigm due to market volatility. Concerns from investors and regulators about the potential listing had previously weighed on SK hynix's stock price. The shelving of the Solidigm listing plan, combined with special dividend expectations, has further heightened market attention on the company's capital allocation direction.
Wednesday's Verdict: Earnings and Shareholder Returns Disclosed Together
All questions will be answered on Wednesday, October 28. SK hynix will release its third-quarter earnings report and simultaneously announce the specific details of its shareholder return plan.
Currently, SK hynix has only stated that it is "reviewing various shareholder return measures," leaving room for interpretation without confirming any details regarding the size or form of the special dividend. The market will closely watch whether the company formally announces a special dividend and whether the specific amount matches the 16 trillion won reported.
Analysts suggest that Wednesday's announcement is not merely about a one-time cash distribution, but will also provide an important window for observing how SK hynix balances capital expenditure, shareholder returns, and strategic reserves at the peak of the AI cycle.
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