Samsung Electronics announced a record $110 billion shareholder return plan, but the stock market reacted negatively. Following the announcement, the stock price fell to around 260,000 won, while competitor SK Hynix performed relatively well, prompting retail investors to lament, "Should we sell Samsung and buy SK Hynix?"
Previously, Samsung announced it would increase its shareholder return to between 90 trillion and 110 trillion won by 2026. This figure significantly exceeds previous records, yet the stock price moved in the opposite direction.
The issue lies in the market's expectation for large-scale share buybacks and cancellations rather than simple cash dividends. Share buybacks reduce the number of shares in circulation, thereby increasing the per-share value for existing shareholders.
While the unprecedented shareholder return is a positive development, the stock price had already reflected some of this optimism, leading to profit-taking that contributed to the decline.
Comparing with SK Hynix clarifies the reasons for Samsung's weakness. SK Hynix has established a strong competitive position in the AI semiconductor market, particularly in high-bandwidth memory (HBM), generating expectations for performance and growth.
In contrast, Samsung operates across various sectors, including memory, foundry, smartphones, and home appliances. While a diverse portfolio is advantageous, the current market focus on AI semiconductors has led to higher valuations for SK Hynix, which directly showcases HBM growth potential.
As a result, investor interest has shifted from "How much will Samsung return to shareholders?" to "How much more can we earn from AI semiconductors?"
Even Samsung's preferred shares, which offer attractive dividend yields, are unlikely to see independent price increases without a reevaluation of the company's value. Experts identify key factors that will determine the future rebound of Samsung's stock price: the recovery of competitiveness in next-generation AI memory technologies like HBM4, the specific proportion of share buybacks within the 110 trillion won shareholder return, and the influx of foreign investment along with improvements in foundry performance.
The era of relying solely on the massive figure of 110 trillion won to support stock prices is over. The current stock market demands not just simple cash returns from Samsung but compelling evidence of "overwhelming growth" that can dominate the AI era.
* This article has been translated by AI.
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