Samsung, SK Hynix Cash Reserves Surpass U.S. Tech Giants, Shareholders Demand AI Windfall Sharing

The AI chip frenzy has enabled Samsung Electronics and SK Hynix (SKHY-US) to amass unprecedented cash reserves, but ambiguous remarks from both companies regarding shareholder return plans during their earnings briefings have angered investors and increased pressure on their persistently falling stock prices.

Last week, SK Hynix’s earnings call merely stated it was “considering additional measures” to enhance shareholder returns, without offering any concrete commitments. Samsung, meanwhile, said it is discussing its shareholder return policy for this year and beyond and will “soon” disclose details. Both companies’ stock prices have fallen approximately 48% and 37%, respectively, from their historical highs, and market skepticism over their capital utilization efficiency continues to grow. This week, JPMorgan analysts downgraded SK Hynix’s target price, noting that “a clear capital allocation stance is crucial to restoring market confidence.”

According to Wall Street Horizon, the pressure comes not only from institutional investors but also retail platforms—this week, the retail investment platform ACT launched a campaign demanding Samsung convene an extraordinary shareholders’ meeting and initiate a share buyback program worth approximately $32 billion. Analysts point out that if management continues to avoid committing to larger-scale shareholder returns, the market may interpret this as a sign that the company lacks internal confidence in the sustainability of AI-driven profits.

Based on LSEG data and its estimates, Samsung and SK Hynix are projected to have a combined net cash reserve of $263 billion by the end of this year—more than double NVIDIA’s estimated $102 billion in net cash and exceeding the total cash holdings of the other six members of the U.S. “Magnificent Seven” tech giants.

Estimates indicate that Samsung and SK Hynix currently aim to allocate 50% of their free cash flow toward shareholder returns. In June, U.S. memory chip giant Micron Technology committed to raising this ratio to 100%, making the contrast stark.

Richard Clode, fund manager at Janus Henderson Investors, stated bluntly: “If you stick to returning 50% of free cash flow, your balance sheet becomes extremely inefficient.” He urged SK Hynix to raise its return rate to at least 80%. Clode further warned that if management says, “We’re uncertain about the future and can’t commit to long-term, large-scale shareholder return programs,” it effectively reinforces the market narrative that “this is just temporary and cyclical.”

SK Hynix stated during last week’s earnings call that it is considering additional shareholder return measures and will announce related plans within the year. Kim Kyu-shik, fund manager at Singapore-based hedge fund Vista Global Asset Management, said: “After the call ended, I was very angry. Shareholders attend these calls expecting to see signals of hope.”

Investors and analysts note that despite delivering record profits driven by AI, the absence of large-scale shareholder return programs creates a disconnect that the market could interpret as management lacking sufficient confidence in the longevity of AI profits.

This interpretation has become a deep-rooted reason behind the sharp pullback in stock prices. Samsung and SK Hynix have historically lagged behind international tech peers such as Apple and TSMC in shareholder returns, and this controversy further intensifies investor dissatisfaction with the so-called “Korea discount.”

In response, SK Hynix stated in a release: “With our record-level cash-generating capability, we believe we can meaningfully increase shareholder returns while maintaining investment and financial stability.”

Samsung said it is discussing its shareholder return policy for this year and beyond, aiming to “soon” disclose details, adding: “While maintaining a healthy balance sheet to address cyclical risks and support growth initiatives, we are exploring ways to increase shareholder returns sustainably.”

There is historical context behind Samsung and SK Hynix maintaining high cash reserves—the memory chip business is highly capital-intensive and subject to strong economic cycles. This year, the two companies have collectively pledged 3,200 trillion won (approximately $2.07 trillion) in domestic investments in South Korea to meet AI demand.

However, Hanwha Investment & Securities analyst Park Jun-young pointed out that both companies are now signing multi-year supply agreements with key customers, helping to avoid the problem of excessive capacity expansion during previous booms and thereby freeing up more cash for shareholder returns.

Aadil Ebrahim, Head of Equities at Klay Group, also stated that given the expected cash-generating power of both companies, “they should be able to provide larger-scale shareholder returns while continuing to invest”—emphasizing that investment and shareholder returns are not “either-or.”

Ebrahim cited Apple’s 2013 capital return program as a precedent. At that time, Apple planned to return $100 billion to shareholders by 2015, including expanding its share buyback program sixfold to $60 billion. He believes that improving capital allocation “could help narrow the ‘Korea discount’ over the long term.”

Markets will now closely watch Samsung’s promised “soon” timeline for disclosing its shareholder return policy and SK Hynix’s detailed plan to be announced within the year. For investors, the true value of this $263 billion cash reserve ultimately depends on whether management is willing to convert it into tangible returns for shareholders.