South Korea's semiconductor behemoths are set to unleash a combined 140 trillion won tidal wave of shareholder returns, igniting the nation's stock market. Samsung Electronics Co Ltd (KRX: 005930) is reportedly preparing to unveil a shareholder return policy exceeding 100 trillion won (approximately $71.75 billion) at a board meeting later this month, according to sources familiar with the matter.
The world's largest DRAM and NAND memory chip maker intends to distribute a record portion of its AI-driven supercycle profits back to investors. Industry insiders reveal that the company's board will convene in late August to approve the plan, which will feature special cash dividends. Under the new framework, Samsung is expected to allocate 50% of its free cash flow to shareholder rewards.
This announcement follows rival SK Hynix Inc (KRX: 000660)'s unveiling of a 40 trillion won share buyback and cancellation program on Wednesday—the largest such scheme ever declared by a Korean listed company. As the world's second-largest memory chip manufacturer, SK Hynix has also committed to deploying over 50% of its free cash flow generated between 2025 and 2027 for shareholder returns.
Combined 140 Trillion Won Return Storm
Korea's semiconductor duo is channeling the enormous cash flows from the AI memory supercycle back to shareholders with unprecedented vigor. On August 19, SK Hynix's board formally approved a 40 trillion won (about $28.7 billion) share buyback and cancellation initiative, setting a historic record for treasury stock retirement among Korean listed companies. Just one day later, Korean media reported that Samsung Electronics is deliberating a shareholder return package exceeding 100 trillion won (approximately $71.75 billion) at its upcoming board meeting, primarily structured around special cash dividends funded by 50% of free cash flow.
The combined 140 trillion won in returns sent shockwaves through the Korean stock market. On August 20, the KOSPI index surged over 6% intraday, with Samsung Electronics spiking as much as 10% and SK Hynix jumping over 12%. The exchange was forced to activate a buy-side circuit breaker mechanism, temporarily halting program trading for five minutes.
Both companies are riding the same AI memory upcycle, with second-quarter results hitting all-time records. Samsung reported revenue of 171.5 trillion won and operating profit of 89.5 trillion won, while SK Hynix posted revenue of 79.3 trillion won and operating profit of 60.5 trillion won, ending the quarter with net cash of 69 trillion won.
Divergent Strategies: Buyback vs. Dividends
Despite sharing the same windfall, the two giants have chosen contrasting tools for distributing wealth. SK Hynix is pursuing the "buyback and cancellation" route. The 40 trillion won program corresponds to approximately 24.07 million shares, representing 3.3% of total outstanding shares, with execution and full cancellation to occur within three months starting August 20. More significantly, the company has raised its cumulative free cash flow shareholder return ratio for 2025–2027 from "within 50%" to "above 50%," running buyback cancellations in parallel with cash dividends.
The cancellation effect permanently reduces share capital, mechanically boosting earnings per share even if profits remain flat. Goldman Sachs has accordingly raised its 2027 and 2028 EPS estimates for SK Hynix by 10% each. The company explicitly stated that its current share price fails to fully reflect its business competitiveness and cash generation capacity.
Samsung Electronics, by contrast, is leaning toward the "cash dividend" path. Reports indicate that the over 100 trillion won return will be delivered primarily through special dividends. This choice stems from governance constraints: large-scale share cancellations could cause affiliated entities such as Samsung Life and Samsung Fire & Marine to passively increase their stakes in Samsung Electronics, potentially breaching regulatory thresholds under Korea's Financial Industry Structure Improvement Act.
Market Impact and Valuation Shifts
As a result, Samsung cannot achieve the same EPS uplift through share reduction as SK Hynix. Instead, its strategy relies on a high dividend yield signal to reset its valuation anchor. If calculated at 50% of free cash flow return, Samsung's dividend yield could jump from the tech-sector norm of 1–2% to approximately 7%.
In the short term, both stocks have already seen dramatic price reactions. After SK Hynix shares plummeted 9.75% on August 19, the after-hours buyback announcement reversed the slide, lifting its US-listed ADRs from a pre-market decline to gains. Samsung, following the scheme report, erupted in a single-day surge, dragging the entire KOSPI's risk appetite back into positive territory.
Both moves collectively signal a paradigm shift: Korea's semiconductor sector is transitioning from "cyclical stocks" to a dual identity of "cyclical plus high shareholder returns." Institutions including Citigroup and Goldman Sachs have swiftly raised target prices for SK Hynix, with Goldman Sachs setting a target of 3.5 million won, implying 133% upside. For Samsung, the median target price among brokers such as KB Securities implies an upside potential of 47% to 160%.
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