Samsung to return record $80bn to shareholders

Samsung Electronics will return a record $80bn to shareholders in the form of dividends and buybacks as the South Korean chipmaker faces pressure to distribute more of its bumper AI-driven profits.

The company said on Friday it would return Won90tn to Won110tn ($65bn to $80bn) to shareholders this year, depending on business performance, investment needs and cash flow. The programme, its largest ever, is about five times its 2020 payout, the previous record.

Samsung plans to buy back Won15tn of its shares from Monday until November 21 and pay about Won30tn in cash dividends in the third quarter.

It will decide on the remaining payouts for the fourth quarter next January, with options including cash dividends, further buybacks and share cancellations.

“This record-setting level of shareholder returns is intended to ensure that the benefits of the company’s growth are delivered to shareholders in a tangible way,” Samsung said, adding that it had balanced the payouts against its need to maintain growth.

Samsung’s move is part of a three-year commitment since 2024 to return half of its free cash flow to shareholders. It comes after its rival SK Hynix said this week it planned to repurchase Won40tn ($29bn) of shares and return more than half of its free cash flow generated between 2025 and 2027 to shareholders.

Investors hope the distributions from the world’s two largest makers of memory chips will help calm concerns over the durability of AI spending.

Samsung and SK Hynix have enjoyed record profits from the build-out of AI data centres that use their semiconductors. Operating profit at Samsung jumped more than 12-fold year on year to more than $100bn in the first half, while that of SK Hynix rose fivefold to about $70bn. Analysts expect full-year combined operating profit to top $400bn.

But investors are beginning to question whether chip demand has reached a peak in a notoriously cyclical industry. Shares of Samsung and SK Hynix have fallen 22 per cent and 41 per cent respectively from their highs in June, though they are still up nearly fourfold and sevenfold in the past year.

Both companies have benefited from strong demand for high-bandwidth memory chips used in AI hardware. Their focus on the top-end products has contributed to shortages of more conventional semiconductors used in consumer electronics, pushing up chip prices across the board.

The bumper profits have intensified pressure on the chipmakers to share more of their windfall with investors.

Samsung chief financial officer Park Soon-cheol said during an earnings call last month that the company would seek to “find the optimal balance between maximising shareholder value and reinvestment for future growth”.

JPMorgan analysts expect SK Hynix to announce further shareholder returns of at least $130bn.

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Analysts said the expanded distributions signalled that the companies were confident they had sufficient financial resources to shore up their share prices while increasing capital spending to meet AI-driven demand.

“The absolute amount looks big, but it is not such a sharp increase in proportion to the company’s strong earnings growth,” said Chaiwon Lee, chair of Seoul-based Life Asset Management.

“However, this shows the company has strong financial firepower to boost shareholder returns and help ease investor discontent,” he added. “The recent share price decline is not due to any change in fundamentals, but rather a pullback after a blistering rally earlier.”