Samsung, SK Hynix Investors Demand Higher Shareholder Returns Amid AI-Driven Cash Boom

Seoul: Shareholders of South Korea’s leading memory chip manufacturers, Samsung Electronics and SK Hynix, are calling for significantly higher dividends and share buybacks after the companies posted record profits fueled by the global artificial intelligence (AI) boom but provided limited details on future capital return plans.

The world’s two largest memory chip makers are generating unprecedented levels of cash as demand for high-bandwidth memory (HBM) and other AI-related semiconductors continues to surge. According to Reuters calculations based on LSEG data, Samsung and SK Hynix are expected to hold a combined $263 billion in net cash by the end of 2026, exceeding the cash reserves of AI giant Nvidia and the combined holdings of the other major U.S. “Magnificent Seven” technology companies.

Despite reporting record earnings, both companies have faced growing pressure from investors for maintaining relatively conservative shareholder return policies. Samsung and SK Hynix currently target payouts equivalent to approximately 50 percent of free cash flow, a level investors argue lags behind global technology peers such as Apple, TSMC, and Micron, the latter having committed to returning all of its free cash flow to shareholders.

Investor concerns have intensified following sharp declines in the companies’ share prices from record highs reached in June. Analysts say the lack of clear commitments on enhanced shareholder returns has fueled doubts over management’s confidence in the long-term sustainability of AI-driven earnings growth.

Retail investor groups have stepped up pressure on Samsung, with activist platform ACT launching a campaign to convene an extraordinary shareholders’ meeting and proposing a share buyback worth approximately $32 billion. Investors have also called for more disciplined capital allocation and greater oversight of executive and employee bonus policies.

Responding to investor concerns, both companies indicated they are reviewing their capital return strategies. Samsung said it is finalizing discussions on a new shareholder return policy and expects to announce details soon, while SK Hynix stated it plans to unveil concrete measures to enhance shareholder returns before the end of the year without compromising investment plans or financial stability.

Market analysts believe the companies possess sufficient financial strength to simultaneously fund massive AI-related investments and increase shareholder payouts. They argue that adopting more generous capital return policies could help narrow the longstanding “Korea discount,” a phenomenon in which South Korean companies often trade at lower valuations than their global counterparts due in part to weaker shareholder returns.