Samsung Electronics has raised the bar for shareholder returns in South Korea with a huge capital return program. However, its local competitor SK Hynix might be in a position to surpass it.
On Friday, Samsung announced that its board approved a 2026 shareholder return plan worth between 90 trillion and 110 trillion won, or about $64.5 billion to $78.9 billion. The company said this program is five times bigger than its previous record payout in 2020 and is the largest commitment of its kind by a South Korean company.
This news comes only a few days after SK Hynix revealed its own stock buyback plan, valued at about $29 billion. The company called it the largest treasury share cancellation ever by a South Korean listed company. This move came after SK Hynix’s recent U.S. listing, although the shares have not performed well since they started trading.
Now, people are watching to see what happens next in the growing competition over shareholder returns. J.P. Morgan thinks SK Hynix could promise at least 180 trillion won, or just under $130 billion, in extra shareholder returns through 2027 when it reports its third-quarter results. This would be about 50% of the company’s total free cash flow from 2025 to 2027, after accounting for current commitments. J.P. Morgan expects SK Hynix to use a mix of treasury stock purchases, cancellations, and dividends, with a greater focus on special dividends, as its current capital return policy lasts through 2027. SK Hynix said this week it plans to return more than 50% of free cash flow to shareholders in the future. Samsung’s current policy for 2024 to 2026 also allocates 50% of free cash flow to shareholder returns.
For U.S. investors, the impact depends on how they own the stock. If you hold SK Hynix’s American depositary receipts, you will get any dividend payments, but these may have custodial fees. Stock buybacks do not directly affect ADR holders. SK Hynix’s ADRs went up slightly in early trading. In comparison, shareholders of U.S. memory chipmaker Micron Technology must wait until at least December 9 before the company can announce any stock buyback. This delay is because of temporary restrictions linked to its government funding.
