Nam Hyun-woo has worked as a staff writer at The Korea Times since 2013, mostly covering business and politics. He currently belongs to the Business Desk where he covers topics such as emerging tech, AI, ICT and Korea's chaebol community. Prior to joining the team, he was the paper's correspondent for the presidential office of Korea during the Yoon Suk Yeol and Moon Jae-in administrations.
Korean chipmakers face growing calls to improve shareholder returns
Samsung Electronics' booth at Future of Memory and Storage 2026 in Santa Clara, Calif., Aug. 5 / Courtesy of Samsung Electronics
By Nam Hyun-woo
Micron, Kioxia's return policies set tough benchmark
Samsung Electronics and SK hynix are facing growing expectations of sizable shareholder return policies, as investors increasingly call for measures that could provide fresh momentum for their share prices.
Samsung Electronics shares closed at 231,000 won ($163.20) on Aug. 7, down about 36.3 percent from their peak closing price of 362,500 won on June 18. SK hynix shares ended at 1.422 million won on Aug. 7, down about 51.3 percent from their peak closing price of 2.919 million won on June 22.
The selloff that continued through last month has eased, but the shares have since moved sideways, trading in a relatively narrow range. Samsung Electronics and SK hynix closed at 230,000 won and 1.42 million won respectively on Monday, down 0.43 percent and 0.14 percent from a session earlier.
Since the two chipmakers have already posted record second-quarter earnings, investors are looking for fresh momentum to drive gains in the companies’ share prices. Analysts say the large-scale shareholder return plans, expected as early as this month, could provide a boost.
KB Securities analyst Kim Dong-won said Monday that Samsung Electronics is expected to announce its shareholder return policy soon, with the total amount “estimated at between 100 trillion won and 200 trillion won,” which would be “more than 10 times larger than the existing 9.8 trillion won.”
Samsung Electronics announced its three-year shareholder return policy for 2024 to 2026 in January 2024, pledging to return 50 percent of cumulative free cash flow generated during the period while also paying regular annual dividends of 9.8 trillion won.
With the policy set to expire soon, the company said during its earnings conference call on July 30 that it would soon announce details of its next shareholder return plan, adding that it will “show its commitment to shareholders who have continued to place their trust in the company.”
Dealers react as a display shows KOSPI as well as share prices of Samsung Electronics and SK hynix at a dealing room of Hana Bank headquarters in Jung District, Seoul, July 29. Yonhap
SK hynix shares fell after the company only said it was “reviewing various additional shareholder return options” during its second quarter earnings call on July 29, without providing specific details.
After the market closed Friday, however, the chipmaker announced a quarterly dividend totaling 273.3 billion won and disclosed that it plans to unveil additional shareholder return measures in the third quarter.
SK hynix also plans to use 50 percent of its free cash flow for its shareholder return policy, which is expected to surpass 100 trillion won by the end of this year. Market expectations are growing that the company’s overall shareholder return package could reach around 100 trillion won through measures such as special dividends, share buybacks and cancellations.
“Unlike competitors such as Kioxia, which have pursued more aggressive shareholder return policies, Korean memory chipmakers have been more conservative than expected in both the timing and scale of their announcements,” Yuanta Securities analyst Lee Jae-won said.
“Even if earnings remain strong for longer, delays in shareholder returns could prevent the basis for stock valuations from shifting to shareholder value.”
Japanese NAND flash maker Kioxia posted 1.27 trillion yen ($11.4 billion) in operating profit for the second quarter, falling short of market expectations. However, it announced an 800 billion yen shareholder return policy at the same time, which contained detailed numbers. Micron also plans to return 100 percent of its excess free cash flow to shareholders.
Meanwhile, industry officials said enhancing shareholder value through shareholder return policies is a corporate responsibility, but it is not easy for companies to quickly unveil long-term plans based on current conditions, as investments, taxes and employee performance bonuses for the second half need to be determined on an annual basis.