[Edaily PARK MIN Reporter Kim Kyung-eun] “110 trillion vs. 40 trillion.” While Korea’s top two semiconductor companies, #Samsung Electronics and SK hynix(000660), have announced the largest shareholder return plans in the history of domestic corporations, their stock prices are moving in opposite directions, drawing attention to the reasons behind this divergence. In terms of the scale of shareholder returns alone, SamsungElectronics took the lead with up to 110 trillion won—more than double that of SK hynix—but its stock price remained largely flat. Meanwhile, SK hynix, which announced a 40 trillion won share buyback and cancellation program, trailed in scale but saw its stock price perform steadily.

Industry analysts attribute the divergent stock price trends to several factors, including: △ differences in shareholder return methods (share buybacks and cancellations vs. cash dividends); △ the immediacy of implementation; and △ differing expectations regarding free cash flow (FCF).

◇Samsung 110 Trillion vs. INICS Corporation 40 Trillion

According to MP Doctor on the 24th, SamsungElectronics closed at 257,000 won, down 8.75% from the previous trading day. SamsungElectronics, which announced the largest shareholder return plan in the history of Korean companies on the afternoon of the 21st, saw its stock price—which had hovered in the 280,000-won range in after-hours trading—drop by nearly 5% to the 270,000-won range, followed by a further decline on this day. Due to the decline in SamsungElectronics—the company with the highest market capitalization—the KOSPI fell 3.12% from the previous session, closing at 6,696.96, just shy of the 6,700 mark.

In contrast, SK hynix opened at 1,745,000 won, rose to 1,792,000 won during the session, and closed at 1,671,000 won—down 3.41% from the previous trading day. This represents a smaller decline compared to SamsungElectronics. Notably, on the 21st, when SamsungElectronics’ stock price fell nearly 5% immediately after announcing its shareholder return plan, SK hynix’s stock rose from 1.73 million won to the 1.76 million won range, demonstrating divergent price movements.

The industry attributes the divergent trends—despite both of South Korea’s top two semiconductor companies announcing shareholder return plans around the same time—to differences in their “methods of shareholder returns” and the “pace of their efforts to boost stock prices.”

Previously, on the 19th, SK hynix’s board of directors approved a plan to repurchase and fully cancel 40 trillion won worth of its own shares. The plan is to purchase 24.07 million shares (40 trillion won), equivalent to 3.3% of its market capitalization, from the 20th through November 19, and cancel the entire lot. Buying back and canceling treasury stock is considered an immediate “stock price boost measure” because it reduces the number of shares available on the market, thereby increasing the value per share and the value of shareholders’ stakes.

In fact, SK hynix purchased 650,000 shares of its own stock on both the 20th and 21st, and is proceeding with the purchase of an additional 650,000 shares today. This means that as the share buyback continues, a significant amount of structural buying demand is being generated every day.

In contrast, while SamsungElectronics has announced a massive figure of “up to 110 trillion won,” a significant portion of this is composed of cash dividends, setting it apart from SK hynix. First, out of the 110 trillion won in shareholder returns, 30 trillion won is planned to be distributed as cash dividends (regular and special) in the third quarter. While cash dividends provide shareholders with direct benefits, a key concern is that stock prices are likely to adjust on the ex-dividend date, when the right to receive dividends expires.

Furthermore, SamsungElectronics has decided to determine the scale of the remaining 60–80 trillion won in cash dividends—excluding the 30 trillion won—as well as additional plans such as share buybacks and cancellations, at a board meeting in January of next year, once the 2026 financial results are finalized. In other words, the extent of share buybacks and cancellations has not yet been decided, and we will have to wait until January of next year to see how it unfolds.

◇ Burden of the ‘10% Rule’ on Financial Affiliates if Samsung Electronics Cancels Shares

One major hurdle is that, for SamsungElectronics to decide on a large-scale share cancellation, it must adjust the ownership stakes of its financial affiliates—Samsung Life Insurance and SamsungFire&MarineInsurance—which hold shares in the company. Under the current “Act on the Structural Improvement of the Financial Industry,” financial affiliates Samsung Life Insurance and SamsungFire&MarineInsurance are limited to holding a combined total of no more than 10% of SamsungElectronics’ shares. As of the end of June, Samsung Life Insurance held 8.51% and SamsungFire&MarineInsurance held 1.49%, meaning they are already at the limit.

If SamsungElectronics cancels its treasury shares, the total number of issued shares will decrease, automatically increasing the ownership stakes of the two insurance companies. In fact, due to this structure, the two insurers have a history of disposing of approximately 1.5 trillion won worth of SamsungElectronics shares via block trades ahead of the company’s treasury stock cancellation last March. In other words, analysts suggest that the structural constraint—where Samsung Life Insurance and SamsungFire&MarineInsurance are forced to sell their stakes every time treasury stock is canceled—may be prompting SamsungElectronics to prioritize dividends over cancellations.

Given these factors, the market is interpreted as ultimately favoring SK hynix in terms of speed and stock price support—focusing on “when and how” returns are made rather than “how much” is returned. Son In-jun, an analyst at EUGENE INVESTMENT & SECURITIES, assessed, “Under the currently announced shareholder return policies, SK hynix holds an advantage in terms of supply and demand, including the scale of buybacks relative to market capitalization, the proportion of trading volume, and whether share cancellations have been confirmed.”

In addition, differing expectations regarding future shareholder returns served as a factor that distinguished the stock price trends of the two companies.

In its latest shareholder return plan, SK hynix raised its future shareholder return benchmark for the next three years from “within 50%” of cumulative FCF to “50% or more.” FCF is the cash actually remaining after subtracting CAPEX (capital expenditures) from the cash a company generates through operations. This effectively removes the upper limit on shareholder returns, raising expectations that the share returning to shareholders will also increase if future earnings and cash generation capacity improve.

In contrast, SamsungElectronics maintained its existing principle of “returning 50% of cumulative FCF for 2024–2026.” Consequently, some observers have assessed that the company fell short of market expectations.

While industry reactions to this shareholder return plan were mixed, analysts projected that if the shareholder return—the largest in the history of Korean companies, amounting to approximately 110 trillion won—is not merely a one-time event but continues in the future, the valuation applied to the stock price itself will rise to a higher level.

Researcher Son stated, “It appears that even if only a portion of SamsungElectronics’ special dividend is reinvested, a significant inflow of funds could continue,” adding, “In particular, since both companies have signaled that they will announce specific details on additional shareholder returns in the future, the upward trend in stock prices driven by competition among companies over shareholder returns is expected to continue.”