Samsung Electronics and SK Hynix are preparing to hand shareholders more than $100 billion combined. It is a record move. And it comes as investors grow increasingly nervous about how long the artificial intelligence chip boom can last.
Both South Korean memory chip giants have been sitting on mountains of cash. Demand for AI hardware has been the main driver. According to Reuters, the two firms are set to hold a combined $263 billion in net cash by year end. That is more than double the cash reserves of AI bellwether Nvidia. It also exceeds the combined cash held by the rest of the so called Magnificent Seven US tech companies.
That kind of wealth has put pressure on both firms to loosen their grip. For months, shareholders complained that Samsung and SK Hynix were lagging behind global peers like Apple and TSMC. Retail investor groups in Korea even pushed for extraordinary shareholder meetings. They wanted bigger buybacks, arguing that both companies lacked urgency despite record profits.
Now, the tide appears to be turning. Bloomberg reports that Samsung is preparing a shareholder return plan worth more than 100 trillion won. That is roughly 72 billion dollars, according to unnamed industry officials. Meanwhile, SK Hynix has already unveiled its own program. It is a 40 trillion won share buyback and cancellation plan worth about 29 billion dollars. Analysts at JPMorgan believe SK Hynix could follow up with additional returns worth at least 130 billion dollars.
Markets reacted almost immediately. Samsung shares jumped as much as 10 percent on the news. SK Hynix climbed nearly 15 percent, according to Bloomberg. On the Korea Exchange, Samsung crossed 270,000 won intraday. That level shows just how fast investor sentiment has shifted.
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The payouts are tied to strong earnings. Samsung posted an operating profit of 89.5 trillion won last quarter. SK Hynix delivered 60.5 trillion won. Demand for high bandwidth memory chips used in AI servers drove much of that growth. Both companies have pledged to return half of their free cash flow to shareholders. Samsung’s policy covers 2024 through 2026. SK Hynix’s policy runs from 2025 through 2027. Some brokerages now estimate the two firms could distribute as much as 300 trillion won a year. That is about 212 billion dollars, if the boom holds.
Still, the payouts are unfolding against a backdrop of unease. Investors have watched AI related stocks swing wildly over the past year. They soared on optimism about the technology’s potential. Then they dropped sharply whenever doubts surfaced about whether the spending boom is sustainable. Analysts say the size of these payouts is partly an attempt to reassure shareholders. Samsung and SK Hynix want to show that their AI driven profits are not just a temporary spike.
Richard Clode is a portfolio manager at Janus Henderson Investors who holds SK Hynix shares. He told Reuters that sticking to a modest 50 percent free cash flow return is risky. In his view, it would leave the companies with an inefficient balance sheet. Failing to commit to a long term return program risks feeding a narrative. That narrative suggests the AI boom is cyclical rather than durable.
Both companies are expected to disclose further details within the third quarter. Investors will be watching closely. They want to know whether these record payouts mark a genuine shift. Or, they may simply reflect a reaction to a nervous market.
