Samsung, SK Hynix prep record shareholder returns amid AI boom
Samsung to announce plan worth more than US$72 billion; SK Hynix will buy back US$29 billion of stock
Samsung and SK Hynix are gearing up for record shareholder returns amid the ongoing AI boom. South Korean financial news site MoneyToday reported that Samsung plans to announce a plan worth over US$72 billion, citing unidentified industry officials. SK Hynix, in response to investor concerns over AI hardware spending sustainability, will buy back US$29 billion worth of stock.
JPMorgan Chase suggested that SK Hynix might follow up with additional returns of at least US$130 billion. Samsung's shares surged by as much as 10.3 percent, while SK Hynix rose 14.7 percent in response to the news.
The South Korean memory chipmakers are facing doubts about the long-term viability of the AI spending surge. However, the surge in demand for their high-bandwidth memory chips, crucial for powering data centers, has strengthened their balance sheets. Investors are increasingly anticipating a return of this windfall to them. Samsung intends to allocate 50 percent of its free cash flow to shareholder returns, with the plan likely focusing on cash dividends, reported MoneyToday. The company is expected to finalize the program following a board meeting in August.
SK Hynix announced its own program to buy back up to 24 million shares by mid-November. The company also increased its shareholder return pledge to more than 50 percent of cumulative free cash flow from 2025 to 2027, equivalent to about US$170 billion. This increase reflects the chipmakers' confidence in their financial capacity to support their stocks while continuing to invest heavily in AI-related endeavors.
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