Samsung Electronics expects shareholder returns up to $80 billion this year

Samsung Electronics anticipates shareholder returns for this year to hit up to 110 trillion won, which is equivalent to $79.54 billion. This includes a 30 trillion won cash dividend in the third quarter, marking a five-fold increase from the previous record of 20.3 trillion won in 2020. The record-breaking profits from the AI boom have driven demand for chips, prompting Samsung to return some of these gains to shareholders.

The company has also utilized 15 trillion won of its earnings to buy back shares for employee stock bonuses. The board will ultimately decide on the remaining payout structures in January 2027, considering cash dividends, share buybacks, and share cancellations. Under its shareholder return policy for 2024 to 2026, Samsung aims to allocate 50% of its free cash flow to shareholders.

Samsung shares experienced a 3.5% increase following the announcement, while SK Hynix's stock rose 4.4%, outperforming the broader market which gained 0.8%. Samsung's research head at CLSA Securities Korea, Sanjeev Rana, explained that these returns would provide a floor for the share price, although some might have anticipated a more comprehensive package.

SK Hynix announced its intent to buy back and cancel 40 trillion won in treasury shares and allocate over 50% of its free cash flow generated between 2025 and 2027 to increase shareholder returns. In the second quarter, Samsung reported a profit surge of over 250 times, reaching 89 trillion won, leading its shares to surge by 300% over the past year.

However, the stock price dropped from a record high in June amid concerns of potential slowing AI spending. Together, Samsung and SK Hynix are projected to hold a combined $263 billion in net cash by the end of the year, which is more than double the estimated $102 billion held by AI bellwether Nvidia and outstrips the combined cash reserves of the other six "Magnificent Seven" U.S. tech companies, according to LSEG data and Reuters calculations.