Samsung Electronics is gearing up to launch an unprecedented shareholder return program, as the AI-fueled memory chip supercycle propels the world's largest chipmaker's cash generation to record levels.

According to MoneyToday's report on Thursday, Samsung plans to finalize and unveil a shareholder return package exceeding 100 trillion won following a board meeting this month. The company intends to allocate 50% of its free cash flow toward shareholder returns, with the measures expected to focus primarily on cash dividends. Samsung indicated that after announcing the plan, it will continue to evaluate additional shareholder return initiatives based on cash flow and earnings performance.

Samsung is not alone in this move. SK Hynix announced on Wednesday that it will repurchase and cancel treasury shares worth 40 trillion won (approximately $28.6 billion), while committing to return at least 50% of free cash flow generated between 2025 and 2027 to shareholders.

Market expectations for substantial shareholder returns have been building rapidly ahead of the announcement. The Seoul Economic Daily previously reported that Samsung Electronics and SK Hynix could unveil new shareholder return schemes as early as late August, with combined returns potentially exceeding 200 trillion won, marking an all-time high. Meanwhile, Singapore's sovereign wealth fund Temasek is planning its first-ever direct investment in the Korean stock market using its own capital, targeting positions in both Samsung Electronics and SK Hynix.

Record Earnings and Cash Flow Back the Payout Capacity

The foundation for Samsung's massive return expectations lies in the rapid growth of its free cash flow.

Samsung posted second-quarter revenue of 171.5 trillion won and operating profit of 89.5 trillion won, both setting new historical records. With memory chip prices climbing and demand for AI-related high-value-added semiconductors continuing to rise, the market projects Samsung's full-year free cash flow to surpass 200 trillion won, with some estimates approaching 250 trillion won. Based on the 50% return ratio, the corresponding shareholder return scale would be approximately 100 trillion to 125 trillion won.

Reports indicate that Samsung recently held non-deal roadshows with domestic institutional investors regarding its second-quarter results, during which it mentioned formulating a shareholder return plan based on free cash flow growth. Some institutions estimated the return scale could even reach 120 trillion won.

This initiative aligns with Samsung's existing shareholder return policy framework. Under the company's 2024-2026 shareholder return policy, Samsung plans to return 50% of cumulative free cash flow over the three-year period to shareholders while maintaining an annual regular dividend of 9.8 trillion won. If surplus funds remain after regular dividends and other returns, the company will consider additional payouts.

Samsung also stated at last month's earnings presentation that both the board and management are discussing specific return measures, including special dividends. In terms of return formats, special dividends and share buybacks with cancellation are considered the primary options.

SK Hynix Unveils 40 Trillion Won Buyback, Industry-Wide Return Wave Emerges

Samsung is not acting in isolation. SK Hynix announced on Wednesday that it will repurchase and cancel treasury shares valued at 40 trillion won (about $28.6 billion), pledging to return at least 50% of free cash flow generated from 2025 to 2027 to shareholders. The company also stated it will continue pursuing additional share buybacks and cancellations, with more details expected when third-quarter results are disclosed. Following the announcement, SK Hynix's U.S. over-the-counter shares surged over 4%, while Korean stocks erased an 8.3% decline in after-hours trading.

According to SK Hynix's regulatory filing, the company will repurchase up to 24 million treasury shares between August 20 and November 19, with the explicit purpose of share cancellation. The company's second-quarter revenue of 79.3 trillion won and operating profit of 60.5 trillion won both set new records. As of the end of the second quarter, cash and cash equivalents rose to 88 trillion won, with net cash expanding to 69.4 trillion won, providing direct backing for the large-scale return. Additionally, SK Hynix has raised its annual fixed dividend from 1,200 won per share to 1,500 won per share.

The combined shareholder return scale of Samsung and SK Hynix, totaling 140 trillion won, marks a new era for shareholder returns in Korea's semiconductor industry.