Investors Press Samsung and SK Hynix for Higher Payouts

Investors are demanding increased shareholder payouts from Samsung Electronics and SK Hynix following record profits driven by the surge in AI chip demand. The two memory chip makers are projected to hold a combined $263 billion in net cash by the end of the year, a reserve that exceeds those of several major U.S. tech firms.

Shareholders have expressed frustration over the companies' current target of returning only 50% of free cash flow, contrasting this with Micron's pledge to return 100%. This dissatisfaction is tied to the "Korea discount," where South Korean companies trade at lower valuations than global peers due to poor capital allocation. In response, SK Hynix stated it can expand shareholder returns while maintaining financial soundness, and Samsung indicated it is exploring sustainable ways to enhance returns.

Pressure has escalated through specific institutional and retail actions. The retail investor platform ACT launched a campaign to force Samsung into a $32 billion share buyback and an extraordinary shareholders' meeting. Additionally, Janus Henderson Investors called for SK Hynix to increase its returns to at least 80% of free cash flow, arguing that the current 50% return level leads to an inefficient balance sheet.