Samsung, SK Hynix Pledge Bigger Shareholder Returns on Record AI-Driven Cash Flow

Samsung, SK Hynix Earn 244 Trillion Won ($176.8 Billion) in First Half

Companies Review Bigger Payouts While Maintaining Financial Strength

Samsung Electronics Co. and SK Hynix Inc. pledged to expand shareholder returns as the artificial intelligence memory boom fuels record cash generation. The companies said they aim to increase investor payouts while preserving funds for investment, and plan to disclose detailed measures by year-end.

Reuters reported on August 5 that both companies are preparing plans to increase shareholder returns. In a statement to Reuters, Samsung said it remains focused on maintaining a sound financial structure to manage cyclical risks and fund growth initiatives, while exploring sustainable ways to raise shareholder returns.

In a separate statement to Reuters, SK Hynix said it is drawing up a detailed shareholder return plan by the end of the year and expects measures that would increase returns in a meaningful way.

The company added that record cash generation should allow it to maintain investment and financial soundness while also lifting shareholder returns. It is reviewing a range of options for additional returns.

Samsung said in its second-quarter earnings release on July 30 that its board and management are actively discussing specific steps for this year's shareholder return policy, including a special dividend, as well as the next shareholder return program. SK Hynix has also said it is considering additional shareholder returns through various methods.

Expectations for bigger payouts have grown as the AI memory boom boosts earnings at both companies. Samsung and SK Hynix posted record second-quarter operating profit, helped by stronger AI demand centered on high-bandwidth memory, or HBM. Samsung's first-half operating profit totaled about 146 trillion won ($105.9 billion), while SK Hynix posted about 98 trillion won ($71.1 billion).

Brokerages estimate Samsung's free cash flow this year at about 200 trillion won ($145.0 billion), while SK Hynix is expected to generate in the mid-100 trillion won range. Both companies plan to use 50% of free cash flow for shareholder returns.

Samsung has said it will return 50% of free cash flow and pay annual dividends of 9.8 trillion won ($7.1 billion) under its three-year shareholder return policy for 2024 through 2026. SK Hynix is also pursuing investment expansion and shareholder value enhancement with a goal of reaching 100 trillion won ($72.5 billion) in net cash.

Kang Kyung-ju, Hankyung.com reporter qurasoha@hankyung.com