Samsung Electronics and SK Hynix are encountering heightened demands from investors for higher dividends or share repurchases following record earnings fueled by artificial intelligence. Despite significant growth in profits, both firms disclosed few specifics on plans for capital returns, prompting concerns from stakeholders.
Investor scrutiny has intensified as Samsung and SK Hynix are projected to hold a combined net cash position of $263 billion by the end of the year, according to data from LSEG. This figure is more than double that of Nvidia, the leading U.S. AI chipmaker, and eclipses the total cash reserves of the other six members of the “Magnificent Seven” U.S. technology group.
Market participants and analysts suggest that without robust commitments to increased shareholder distributions, management might be signaling caution over the sustainability of AI-driven profitability. Currently, both Korean chipmakers allocate 50% of free cash flow to shareholder returns, a policy seen as conservative when compared with U.S. chipmaker Micron, which recently committed to returning its entire free cash flow.
In an earnings briefing last week, SK Hynix stated it was evaluating ways to boost shareholder returns and would unveil its approach later in the year. Samsung, meanwhile, is reviewing its returns policy and intends to provide further information soon.
Samsung has become a focal point of shareholder activism. Retail investors have initiated efforts to convene an extraordinary general meeting, seeking significant share repurchases and limits on executive bonuses.
Analysts point out that long-term supply contracts in AI memory markets are now providing steadier cash flows, marking a shift from previous industry cycles. This stability, combined with rising competition among memory producers for shareholder returns, may influence corporate valuations going forward.
