Record memory chip profits are funding the biggest capital return in Samsung's history, even as both it and SK Hynix trade below where they were two months ago.
Samsung is planning a shareholder return package of up to 110 trillion won, roughly $80 billion, for 2026, about five times the company's previous annual record. The plan builds on an existing policy of returning 50% of free cash flow to shareholders, which already includes 9.8 trillion won in regular annual dividends, and comes as Samsung is simultaneously spending more than 110 trillion won on capital expenditure and research this year.
The announcement followed a similarly sized move from SK Hynix, which approved a 40 trillion won, roughly $28.6 billion, buyback covering about 24.1 million shares, or 3.3% of its outstanding stock, with every repurchased share to be cancelled rather than held in treasury. SK Hynix also raised its own capital return commitment, from within 50% to at least 50% of cumulative free cash flow through 2027.
Both companies are citing the same driver: an AI memory boom severe enough that, per one securities firm's estimate, customers are receiving only about 60% of the supply they are requesting, a shortage expected to persist for years given how long new fabrication capacity takes to build. That combination, record profits, a supply shortage expected to persist, and now record capital returns, is about as strong a case as either company could make that this cycle is durable rather than a temporary spike.
Yet both stocks have pulled back sharply from their June highs despite reporting record earnings in the same period, a reminder that the market's read on how long an AI-driven capital-spending and pricing cycle can last does not move in lockstep with the reported numbers, even when a company is putting a record amount of money behind its own confidence in that cycle.