[E-Daily Reporter Park Jung-Soo ] As SamsungElectronics(005930)and SK hynix(000660)accumulate massive cash reserves on the back of the artificial intelligence (AI) semiconductor boom, market attention is shifting toward shareholder returns. The securities industry estimates that if the two companies were to return 50% of their free cash flow (FCF) to shareholders, their total shareholder return capacity would be approximately 200 trillion to 220 trillion won. In particular, as global memory manufacturers such as Micron have announced plans to return 100% of their excess cash to shareholders, market expectations for shareholder returns from SamsungElectronics and SK hynix are also rising.

◇ Samsung Electronics and SK INICS Corporation to Return Over 200 Trillion Won Annually to Shareholders
According to the financial investment industry on the 18th, SamsungElectronics and SK hynix are expected to announce new shareholder return policies during the third quarter. The securities industry predicts that the combined annual shareholder returns for the two companies will total 220 trillion won (120 trillion won for SamsungElectronics and 100 trillion won for SK hynix). Some observers point out that the figure of up to 300 trillion won in shareholder returns, as suggested by some quarters, is excessive when considering the two companies’ annual capital expenditure levels.
An industry official pointed out, “A shareholder return of up to 300 trillion won reflects excessive expectations, especially when considering the large-scale semiconductor investments planned for Yongin and the Honam region.”
SamsungElectronics is currently implementing a policy of allocating 50% of the free cash flow (FCF) generated over the three-year period from 2024 to 2026 toward shareholder returns and paying an annual regular dividend of 9.8 trillion won. The company’s policy is to provide additional returns if any remaining funds are available after the regular dividend is paid. SamsungElectronics has stated that it may announce a new shareholder return policy even before the current policy period ends, taking into account factors such as mergers and acquisitions (M&A) and cash reserves.
With profits and cash flow surging due to the semiconductor boom, the scale of shareholder returns is also expected to increase significantly. Major securities firms estimate that SamsungElectronics’ free cash flow (FCF) this year will reach between 230 trillion and 270 trillion won. If 50% of the FCF is allocated as per the current policy, the funds available for shareholder returns would amount to around 120 trillion won.
Analysts also suggest that SK hynix has the capacity for shareholder returns in the range of 90 trillion to 100 trillion won. EUGENE INVESTMENT & SECURITIES projected that SK hynix’s net cash will increase to around 200 trillion won by the end of this year, securing the capacity for shareholder returns of up to 100 trillion won. The firm also raised the possibility of an initial announcement regarding special shareholder returns during the third quarter of this year.

◇ Possibility of 100% Shareholder Return of Excess Cash
Market attention is focused on whether additional shareholder returns will be made beyond the existing 50% free cash flow (FCF) return policy. This is because global memory companies are successively rolling out aggressive capital return policies.
Micron has announced plans to expand capital returns starting next year and, in the long term, return 100% of excess cash to shareholders. SanDisk has also unveiled a capital allocation principle stating that it will return 100% of excess cash generated after investments necessary for its business to shareholders.
EUGENE INVESTMENT & SECURITIES predicted that these strengthened policies by competitors will spur SamsungElectronics and SK hynix to implement additional shareholder returns. In particular, the firm highlighted the possibility that the return ratio—currently at 50% of free cash flow (FCF)—could be increased in SamsungElectronics’ next three-year shareholder return policy.
The securities industry, however, remains cautious about the likelihood that domestic companies will adopt shareholder return policies identical to those of U.S. firms. This is because SamsungElectronics and SK hynix must allocate their increased cash not only to shareholder returns but also to employee compensation, domestic and international capital expenditures, and research and development (R&D).
In fact, both companies are continuing to make large-scale investments even as their cash generation capacity has grown rapidly. SamsungElectronics’ consolidated cash flow from operating activities exceeded 145 trillion won in the first half of this year, but the company also invested 31.2348 trillion won in the acquisition of tangible assets. Of the 27.9864 trillion won in capital expenditures for the first half, 25.6030 trillion won was allocated solely to the DS Division, which handles semiconductors.
SK hynix also faces a significant investment burden. According to its semi-annual report, as of the end of June, the amount committed to the purchase of tangible assets that had not yet been disbursed stood at 61.4845 trillion won on a consolidated basis—more than nine times the 6.6679 trillion won recorded at the end of last year. Analysts note that, with demands for increased employee compensation and the government’s policy to expand the domestic semiconductor production base, domestic companies face a more complex web of stakeholder interests to consider in their capital allocation process compared to U.S. memory companies.
Kim Jae-seung, an analyst at HYUNDAI MOTOR SECURITIES, stated, “Even if profits and cash flow increase, it will not be easy to achieve valuations on par with those of U.S. memory companies,” adding, “The extent to which companies can balance these complex interests while maximizing returns to shareholders will likely determine whether the upward momentum in the semiconductor sector continues.”
Experts believe that even if the scale of shareholder returns falls short of the market’s heightened expectations, the negative impact on stock prices will be limited. This is because the scale of returns itself is substantial, even if SamsungElectronics and SK hynix merely fulfill their previously stated commitment to return 50% of free cash flow (FCF).
Noh Geun-chang, head of the Research Center at HYUNDAI MOTOR SECURITIES, said, “Even if returns amount to only 50% of FCF, the absolute scale is large,” adding, “It is unlikely to have a negative impact on stock prices as long as the existing return criteria are met.” He also considered it unlikely that returns would fall below the existing 50% FCF benchmark.
There is also growing speculation that shareholder returns will be distributed in two phases. Ryu Hyung-geun, an analyst at DaishinSecurities, predicted, “We expect a ‘two-stage return’ in which a portion will be returned early in August or September of this year, with the remaining funds distributed after the annual earnings are finalized,” adding, “SamsungElectronics is likely to follow up its first round of share buybacks and cancellations with a second special dividend, while SK hynix will likely adopt a hybrid approach combining a special dividend with share buybacks and cancellations.”