Calls for more aggressive shareholder returns are growing among investors after Samsung Electronics and SK hynix failed to present concrete plans during their second-quarter earnings conference calls, despite posting record results. Both companies said they would develop and disclose expanded shareholder return measures.
Disappointment spread through the investment community after the two chipmakers offered no specific shareholder return plans on their second-quarter calls. Although both companies posted their best-ever quarterly earnings, Samsung Electronics' share price fell as much as 3.12 percent during trading on Wednesday — the day the calls were held — while SK hynix tumbled as much as 19.61 percent.
Analysts note that Samsung Electronics and SK hynix still lag global technology peers such as Apple and TSMC in shareholder returns, which those companies have boosted through aggressive dividends and share buybacks. That gap, combined with persistent calls to address the chronic "Korea discount," has intensified investor pressure on both companies' capital allocation policies.
At its second-quarter earnings release on Wednesday, Samsung Electronics said its board and management were "actively discussing specific implementation measures for shareholder return policy, including a special dividend this year, as well as the next shareholder return policy." SK hynix said only that it was reviewing additional shareholder return options through various means.
As shareholder frustration mounted, Samsung Electronics told Reuters on Wednesday that it was "continuing to focus on maintaining a sound financial structure to manage cyclical risks and fund growth initiatives, while also exploring ways to expand shareholder returns in a sustainable manner."
In a separate statement to Reuters, SK hynix said it was working to finalize a concrete shareholder return plan by year-end and that it "expects to expand shareholder returns to a meaningful level."
The company added that it "believes it can expand shareholder returns to a meaningful level while maintaining investment and financial soundness on the back of record-high cash generation," and said it was "reviewing various options for additional shareholder returns."
The memory chip industry's high cyclical volatility and the need to execute large capital expenditures at the right time have historically kept both companies' shareholder return policies relatively conservative. Both target returning half of their three-year cumulative free cash flow through dividends and share buyback and cancellation.
Last year, Samsung Electronics allocated 11.11 trillion won ($7.83 billion) to cash dividends and 8.19 trillion won to share buybacks. SK hynix spent 2.1 trillion won on cash dividends and 12.2 trillion won on share cancellations. Measured by cash dividend payout ratio alone, the figures stand at 25.1 percent and 4.9 percent, respectively — levels not generally considered high.
Yet as both companies have broken earnings records every quarter recently, their combined year-end net cash — cash and cash equivalents minus borrowings — is expected to more than double that of Nvidia, and calls for more aggressive shareholder returns are spreading.
Citing consensus estimates compiled by financial data firm LSEG, Reuters reported that Samsung Electronics and SK hynix are expected to hold year-end net cash of $164.1 billion and $99.3 billion, respectively.
Combined, that figure is more than twice the $101.7 billion held by Nvidia, which continues to pour investment into AI infrastructure. It also surpasses the combined cash holdings of the other six members of the US market's "Magnificent Seven" — Apple, Microsoft, Alphabet, Amazon, Meta and Tesla.
By contrast, Micron pledged in June to return 100 percent of its free cash flow to shareholders. Micron Chief Financial Officer Mark Murphy said the company would "expand shareholder returns starting later this year and, over the long term, return 100% of free cash flow to shareholders."
Analysts warn that if record earnings are not accompanied by a clear shareholder return roadmap, the market may interpret the silence as a signal that management lacks confidence in the sustainability of the AI boom — potentially eroding investor confidence in the earnings outlook.
Richard Claude, a portfolio manager at Janus Henderson Investors, which holds SK hynix shares, said sticking to around 50 percent of free cash flow "will result in an inefficient balance sheet" and urged the company to raise its shareholder return ratio to at least 80 percent of free cash flow. "I think SK hynix understands the urgency and disruption in the current market," he said.
Some investors are also calling for broader improvements beyond expanded dividends and share buyback and cancellation — including rationalizing executive and employee performance compensation structures and overall cost efficiency.
Act, a retail shareholder platform, said "how to distribute the free cash a company earns is a shareholder right" and called on the market to recognize "who the true owners of a corporation are." Act said it would initiate procedures to convene an extraordinary general meeting and plans to propose measures addressing Samsung Electronics' employee bonus structure and a share buyback worth approximately 45.5 trillion won.
Some voices, however, argue that restoring corporate competitiveness must come first.
Yoon Dong-yeol, a professor of business administration at Konkuk University and president of the Korean Academy of Business Administration, said the distribution of corporate earnings should follow a clear order: reinvestment in future competitiveness first, then fair compensation for employees who contributed to performance, and finally dividends and value enhancement for shareholders who supplied risk capital.
He added that "true shareholder returns come not just from recovering earnings, but from linking that recovery to restored corporate competitiveness," and said that "improving profitability in the HBM business and foundry operations is the most important priority and the starting point for enhancing shareholder value."
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