Samsung, SK hynix Finish 55 Trillion Won Buybacks

SK hynix and Samsung Electronics. As Samsung Electronics and SK hynix complete their share buybacks totaling 55 trillion won (about $41.53 billion), attention is focusing on whether they will introduce additional shareholder return policies through their earnings announcements at the end of October. The two companies conducted massive share buybacks based on record-breaking performances driven by the boom in the artificial intelligence (AI) semiconductor market. Going forward, they are expected to enhance shareholder value through special dividends and share cancellations. According to the industry on Oct. 22, Samsung Electronics and SK hynix recently completed share buybacks of 15 trillion won and 40 trillion won, respectively. The combined size of the share buybacks by the two companies reaches a total of 55 trillion won. SK hynix finished its share buyback, which had been ongoing since Aug. 20, in the KOSPI market on Oct. 21. Initially, the share buyback period was approximately three months from Aug. 20 to Nov.19, but it concluded about a month earlier than scheduled. Previously, SK hynix disclosed on Aug. 19 that it would acquire 24.07 million common shares for a total of 40.0043 trillion won and cancel all of them. Samsung Electronics also completed the purchase of its own shares, amounting to about 15 trillion won (56.85 million shares), from Aug. 24 to Oct. 6. Accordingly, the market is paying attention to the possibility that both companies will present additional shareholder return policies through their third-quarter earnings announcements and conference calls scheduled at the end of October. Samsung Electronics reported an operating profit of 107.4 trillion won in its preliminary third-quarter earnings announced in early October. Exceeding 100 trillion won in quarterly operating profit is a first in the history of South Korean companies and the first among global tech companies. In this context, Samsung Electronics announced a plan for additional shareholder returns of up to 110 trillion won this year. The market anticipates that Samsung Electronics will undertake cash dividends of 70 trillion to 80 trillion won and share cancellations and buybacks amounting to 30 trillion to 40 trillion won. As it executes a cash dividend of about 30 trillion won in the third quarter, it is projected to carry out an additional dividend of 40 trillion to 50 trillion won in the fourth quarter. With the continuing trend of earnings improvement for Samsung Electronics, there are voices suggesting that the scale of shareholder returns will be expanded. A next-generation shareholder return policy that exceeds the existing standard of 50% of free cash flow (FCF) may emerge. SK hynix is also expected to announce an additional shareholder return policy at the time of its third-quarter earnings release. Analysts suggest that SK hynix will surpass 80 trillion won in quarterly operating profit as shipments and sales prices of DRAM and NAND flash rise. Revealing its plan to acquire and cancel 40 trillion won worth of treasury shares in August, SK hynix previously stated, “We plan to promote additional shareholder returns by parallelly executing the acquisition and cancellation of treasury shares and dividends, considering cash flow, market conditions, and distributable profits within the policy period.” The company also plans to review measures to expand dividends, including the existing fixed dividends and special dividends. In the stock market, there are forecasts that SK hynix’s financial resources for additional shareholder returns will be at least 30 trillion won. Kim Rok-ho, a researcher at Hana Securities, stated, “Based on the free cash flow, we expect financial resources for additional shareholder returns to be at least 30 trillion won,” adding, “It appears that share buybacks and cancellations will be used more significantly than dividends.” However, as both companies are also expanding large-scale investments in semiconductor production facilities alongside shareholder returns, their future cash utilization strategies are considered a major variable. Industry attention is drawn to how much the two companies can expand the scale of shareholder returns while maintaining investment resources to secure future growth engines.