When it comes to returning cash to shareholders, anything SK Hynix can do, Samsung can do bigger

By Jules Rimmer

South Korea's largest company announces a buyback program worth 100 trillion won

Rumors of a Samsung buyback have circulated in the market for a few days before the news was confirmed Friday.

Just days after SK Hynix announced a share-buyback program worth 40 trillion won ($28.7 billion), its rival semiconductor manufacturer in South Korea, Samsung Electronics, has announced an even bigger package, estimated to be worth between 90 trillion and 110 trillion won. This includes 30 trillion won in cash dividends for the third quarter, as well as share buybacks and cancellations.

Although the plan was released after the close of trading in Seoul, reports of the proposals were circulated widely in the last few days after the SK Hynix (KR:000660) announcement Wednesday. After announcing excellent second-quarter earnings in July, Samsung's chief financial officer Park Sooncheol had promised the company would "soon share a plan to find the optimal balance between maximizing shareholder value and reinvestment for future growth."

It's the largest ever by a Korean company and management commented in its press release that itplanned to follow through on its previous commitments to return 50% of free cash flow to shareholders over three years.

Samsung (KR:005930) has experienced explosive growth in profitability over the last few years as the AI capex boom has generated enormous demand for its memory chips that has outstripped supply. Net income is expected to rise more than sevenfold in 2026, compared with 2025, according to estimates compiled by FactSet.

Samsung shares have enjoyed stellar returns since the record-setting Korean market rally KR:180721 began last spring 2025 and are up 118% this year.

However, doubts about the sustainability of AI capex and whether margins can be preserved in the face of Chinese competition from the likes of CXMT (CN:688825) have eaten away at gains over the summer and July's volatility saw its stock fall almost 40% in a four-week period.

Moreover, excessive speculation, much of it conducted with extreme leverage, led to violent selloffs during that time.

Despite the fourfold increase in the share price over the last 12 months, significant upgrades in earnings consensus for Samsung make the stock relatively inexpensive on price-to-earnings multiples, trading on just 5x 2026 estimates.

Concerns about how long the supercycle in memory-chip pricing can endure have been partially addressed by a 15% price hike announced this week and long-term agreements being signed with partners like Anthropic, for example.

Shareholders will hope these developments might smooth out some of the cyclicality in Samsung's earnings profile and maybe lead to better ratings. U.S. semiconductor stocks like Micron (MU) and Sandisk (SNDK) both trade on PE multiples around 22x. The aim to improve ratings was partly behind the SK Hynix (SKHY) Nasdaq listing of its depositary receipts in July, and there have been reports of Samsung also exploring this option.

In London trading Friday morning, Samsung's global depositary receipts were trading 0.58% higher at $4850 while SK Hynix ADRs were indicating 2.5% better at $167.11 in premarket U.S. trading.

-Jules Rimmer

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08-21-26 0816ET