Samsung, SK Hynix prep record shareholder returns in AI boom

Samsung Electronics and SK Hynix are set to deliver record shareholder returns, according to industry reports. Concerns over the sustainability of AI hardware spending caused investors to initially pull their stocks, causing the shares to tumble. Samsung plans to announce a plan worth over 100 trillion won (S$91 billion), while SK Hynix unveiled a program to buy back 40 trillion won (S$32 billion) of stock.

JPMorgan Chase forecasts that SK Hynix may follow with additional returns worth at least US$130 billion (S$165 billion). Samsung's shares surged up to 10.3% while SK Hynix increased by 14.7%.

Both companies are facing uncertainties about the durability of the AI spending boom. Demand for high-bandwidth memory chips, which are vital for powering data centers, has boosted their balance sheets. Investors are now anticipating a return of this windfall to them. Samsung has announced that it will allocate half of its free cash flow to shareholder returns, with a focus on cash dividends. The company's measures are expected to be finalized after a board meeting in August.

SK Hynix is planning to repurchase up to 24 million shares and cancel them by mid-November. The company has also increased its shareholder return commitment, pledging to return more than 50% of cumulative free cash flow from 2025 to 2027, equivalent to about US$170 billion. This move underscores the chipmakers' confidence in their financial strength to support their stocks while continuing to invest heavily in AI-driven demand.