Shares of Samsung Electronics fell more than 8% in early trading on Monday following the announcement of a record shareholder-return plan. The South Korean technology firm projected returns of 90 trillion won to 110 trillion won ($65 billion to $80 billion) for the current year. While the figure represents five times the company's previous record set in 2020, analysts noted the amounts were lower than market expectations, leading to a decline in share price.
The announcement follows a period of high profits for chipmakers driven by demand for artificial intelligence (AI) technology. Last week, both Samsung and rival SK Hynix faced investor pressure to distribute a larger portion of these cash gains. Samsung stated on Friday that its plan includes 30 trillion won in cash dividends for the third quarter. The company remains committed to its 2024–2026 policy of returning 50% of free cash flow to shareholders.
Market analysts expressed disappointment over the lack of specific details regarding share buybacks and cancellations. Sohn In-joon, an analyst at Eugene Securities, noted that unlike its competitor SK Hynix, Samsung did not announce plans to cancel treasury shares. SK Hynix recently announced it would buy back and cancel 40 trillion won of treasury shares. Samsung's complex ownership structure, involving affiliates Samsung Life and Samsung Fire, reportedly complicates buybacks because regulatory limits could force those affiliates to sell their holdings if Samsung's own ownership ratios shift.
The scale of the returned capital is significant, totaling up to 110 trillion won ($80 billion) for the year. However, the market's reaction suggests that investors prioritized the method of return over the total dollar amount. By allocating an estimated 60 trillion to 80 trillion won primarily to dividends rather than share buybacks, Samsung provides taxable income to shareholders but offers less direct support for the share price. In contrast, share cancellations, like those planned by SK Hynix for 40 trillion won, reduce the total number of shares, which can increase the value of each remaining share.
The financial performance of Samsung and SK Hynix serves as a benchmark for the broader technology sector and the South Korean economy. The 3.1% drop in the KOSPI benchmark index on Monday reflects how heavily these chipmakers influence regional markets. Moving forward, the Samsung board of directors is scheduled to decide on the final payout amounts, including potential buybacks and cancellations, in January 2027. Investors will also be monitoring the company's next capital-return framework, which is expected to take effect later next year.