(Aug 21): Samsung Electronics Co plans to return as much as 110 trillion won (US$80 billion or RM320 billion) to investors this year, joining SK Hynix Inc in sharing an artificial intelligence (AI) windfall and putting in motion the largest shareholder return programme in South Korea’s history.

The world’s biggest memory maker will give about half of its free cash flow to shareholders, with 30 trillion won of cash dividends planned for the third quarter, it said in a regulatory filing Friday. It also aims to buy back about 15 trillion won of stock for employee compensation. Samsung didn’t elaborate on how it would pay out the remainder of the targeted amount.

Samsung’s programme ranks among the largest-ever shareholder return plans. In 2024, Apple Inc approved US$110 billion (RM444.24 billion) of repurchases in what was dubbed the biggest US stock buyback ever. Still, Friday’s announcement didn’t include the proportion allocated to share buybacks and cancellations. 

Samsung said the remaining returns will be finalised at a January board meeting. Its shares erased gains and fell as much as 2.6% in post-market trading after some investors found the announcement underwhelming. The won strengthened on Friday, rising as much as 1%.

“Some investors have recently expected up to 150 trillion won of shareholder returns, which explains the post-market share” action, said Kim Minji, a portfolio manager at Must Asset Management.

The moves by the two suppliers of memory to Nvidia Corp — and key architects of the AI buildout — respond to growing investor pressure to share more of the cash generated by the boom.

SK Hynix’s 40 trillion won buyback plan has added pressure on Samsung to return more cash to shareholders, who point to the electronics giant’s swelling reserves. Expectations of a sizeable shareholder return programme have buoyed Samsung’s stock this week.

“This could help spark a broader structural change across the Korean stock market,” said Tom Kang, research director at Counterpoint. “We see this as a solid step toward a more shareholder-focused style of management — much closer to what you typically see in the US market.”

Samsung’s preferred shares surged more than 8% ahead of the announcement on Friday. The surge may reflect expectations for stronger shareholder returns and higher dividends for preferred shares. Such shares have also traded at “a significant discount”, according to Albert Yong, managing partner and chief investment officer at Petra Capital Management.

“The real question is how much is incremental and how much comes through buybacks versus dividends,” he said.

“The key question for investors will now be how the remaining capital is returned, rather than just the headline amount,” said Jung In Yun, chief executive officer at Fibonacci Asset Management Global. “In particular, the market is likely to focus on the proportion allocated to share buybacks and cancellations versus special dividends.”

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