SanDisk Vows to Return 100% of Free Cash Flow to Shareholders, Fueling Focus on SK Hynix Payout

SanDisk to use 100% of free cash flow for dividends and buybacks

Shares surge 13.7%

SK Hynix also poised to announce shareholder returns in the third quarter

Estimates for the payout range from 40 trillion won ($28.9 billion) to 100 trillion won ($72.2 billion)

SanDisk’s decision to devote 100% of its free cash flow to shareholder returns is sharpening investor focus on the size of SK Hynix’s own payout plan, which is due to be disclosed soon.

At an Investor Day event on August 13, the U.S. NAND flash maker said revenue in fiscal 2028 through 2030 would rise at an annual rate in the mid- to high-teens, driven by strong demand from the expansion of artificial-intelligence infrastructure.

SanDisk said it has signed long-term supply agreements, or NBMs, with eight customers so far, including three U.S. hyperscalers, with an average contract length of four years. Those commitments account for half of bit output in fiscal 2027, which runs from September 2026 through August 2027, and about two-thirds of fiscal 2028 production.

The company also updated investors on high-bandwidth flash, or HBF, a next-generation memory technology. SanDisk is collaborating with SK Hynix on HBF development.

Chief Technology Officer Alper Ilkbahar said the company has completed tape-out of its first memory die using HBF technology. It plans to provide early samples next year to customers developing AI inference devices.

HBF combines the speed of high-bandwidth memory, or HBM, used in AI processors with the high-capacity characteristics of NAND flash. The technology is intended to address surging demand for AI inference memory in data centers.

Investors also zeroed in on SanDisk’s capital-return plan. Chief Financial Officer Luis Visoso said the company would return all free cash flow remaining after required business investment to shareholders, likely through dividends and share repurchases.

SanDisk shares closed 13.7% higher on August 13 after the plan was unveiled. The stock has surged 455% this year.

SK Hynix, which has drawn criticism over potential dual-listing concerns tied to a planned initial public offering of its U.S. subsidiary Solidigm, is set to announce a shareholder-return plan in the third quarter.

The company said on August 7, when it declared a quarterly dividend of 375 won a common share, that additional shareholder-return measures would be announced in the third quarter after investors reacted with disappointment.

SK Hynix’s free cash flow this year is estimated at the mid-100 trillion won level. Kim Young-geon, an analyst at Mirae Asset Securities, said the company would still have 70 trillion won to 80 trillion won in available funds even if it kept 100 trillion won in cash as a safety buffer, leaving room for shareholder returns of about 40 trillion won.

Overseas investors are watching closely as well. Bloomberg reported on August 12 that broader shareholder returns from Samsung Electronics and SK Hynix could help shield the stocks from fears that the semiconductor boom has already peaked.

Samsung Securities expects SK Hynix to return 57 trillion won this year and 120 trillion won next year based on 50% of free cash flow. It also included proceeds of 63.3 trillion won from a sale of the company’s stake in Japan’s Kioxia as a potential source for shareholder returns. Based on the current share price, it projected a dividend yield of 3.6% this year and 7.9% next year.

Daishin Securities said the company could spend as much as 100 trillion won on shareholder returns. Ryu Hyeong-geun, an analyst at Daishin Securities, said SK Hynix had presented a target of 100 trillion won in net cash for this year at its shareholder meeting earlier in 2026 and had already surpassed it. He cited a supercycle in earnings, the payoff from strategic investments through a large inflow from the Kioxia stake sale, and a capital increase through ADR issuance as factors that could support as much as 100 trillion won in buybacks, share cancellations and special dividends.

Noh Jeong-dong, Hankyung.com reporter dong2@hankyung.com