The storage giant's shareholder returns of over 100 trillion won explode the market! Samsung's stock price surged 10% to drive the Korean stock market to take off

Zhitong Finance App learned that according to people familiar with the matter, given that Samsung Electronics, the world's largest manufacturer of DRAM/NAND memory chips, plans to share record profits with shareholders during the AI-driven memory chip supercycle, the company's management will announce a new shareholder return policy worth more than 100 trillion won (about 71.75 billion US dollars) later this month.

The South Korean memory chip maker will hold a board meeting at the end of August to approve a shareholder return plan that includes a special dividend, industry insiders said.

Allegedly, Samsung will spend 50% of its free cash flow on this new plan.

Its local competitor SK Hynix unveiled a 40 trillion won share repurchase and cancellation plan on Wednesday, the largest shareholder return plan announced by a Korean listed company.

As the world's second-largest memory chip manufacturer after Samsung, SK Hynix also said it will use more than 50% of the free cash flow generated between 2025 and 2027 for shareholder returns.

Storage Shuangxiong's 140 trillion won return storm

Korea's semiconductor duo is making unprecedented efforts to feed back the huge cash flow earned from the AI storage supercycle to shareholders. On August 19, SK Hynix's board of directors officially approved a 40 trillion won (approximately US$28.7 billion) share repurchase and cancellation plan, setting a record for the largest treasury stock cancellation in the history of a Korean listed company. Just a day later, Korean media reported that Samsung Electronics plans to review a shareholder return plan of over 100 trillion won (about 71.75 billion US dollars) at the board meeting at the end of August, which will be mainly special cash dividends, and the funding source will be 50% of free cash flow.

The two returns totaled about 140 trillion won, directly detonated the Korean stock market — KOSPI rose more than 6% in the intraday on August 20, Samsung Electronics once rose more than 10%, SK Hynix rose more than 12%, and the Korea Exchange was forced to launch a sidecar purchase mechanism to suspend programmatic purchases for 5 minutes.

Both companies are in the same upward cycle of AI storage, and their second-quarter financial reports both set historical records: Samsung's revenue of 171.5 trillion won, operating profit of 89.5 trillion won; SK Hynix's revenue was 79.3 trillion won, operating profit was 60.5 trillion won, and net cash at the end of the quarter reached 69 trillion won. However, when it comes to “how to split money,” the two chose very different tools.

SK Hynix is following the “buyback and cancellation” route. KRW 40 trillion corresponds to approximately 24.07 million shares, accounting for 3.3% of the total share capital. It was executed and completely cancelled within three months from August 20. More importantly, the company raised the return on cumulative free cash flow to shareholders from 2025 to 2027 from “less than 50%” to “more than 50%”, and the repurchase cancellation went hand in hand with cash dividends. The direct effect of the cancellation is a permanent reduction in share capital — a mechanical increase in earnings per share without changing profits. Goldman Sachs raised Hynix's 2027 and 2028 EPS forecasts by 10% each based on this. The company made it clear that the current stock price does not fully reflect its business competitiveness and cash creativity.

Samsung Electronics, on the other hand, favors the “cash dividend” path. According to reports, returns over 100 trillion won will be mainly in the form of special dividends. There are practical restrictions at the governance level behind this choice: if related companies such as Samsung Life and Samsung Fire passively increase their shares in Samsung Electronics through large-scale share cancellation, it will trigger the regulatory red line of South Korea's “Financial Industry Structure Improvement Law.” As a result, Samsung is unable to obtain an additional EPS boost through stock reduction like Hynix. Its supporting logic is more to use high dividend rate signals to restructure the valuation anchor — if calculated based on a 50% return of free cash flow, Samsung's dividend rate is expected to jump from 1-2% to around 7% of technology stock practices.

In the short term, both share price catalysts have been vigorously realized. After Hynix's original stock plummeted 9.75% on August 19, the post-market repurchase announcement directly drove the ADR of the US stock market from decline to rise; Samsung broke out in a single day after the plan was reported, driving the overall KOSPI risk appetite back.

The actions of the two companies together point to a paradigm shift: the Korean semiconductor sector is shifting from a “cyclical stock” to a dual attribute of “cyclical+high shareholder return.” Institutions such as Citibank and Goldman Sachs quickly raised Hynix's target price. Goldman Sachs offered 3.5 million won, implying 133% upward space; on the Samsung side, the median target price of institutions such as KB Securities implied 47%-160% upward potential.