Shareholder payouts from Samsung Electronics and SK Hynix are emerging as a crucial test of South Korea’s drive to narrow the so-called “Korea discount”, with investors warning that record cash returns alone may not be enough to change the market’s long-standing scepticism.
The two semiconductor groups are expected to return at least 130 trillion won (£72 billion) to investors during 2026, after an artificial intelligence boom sent profits and cash generation sharply higher. The scale of the plans has been welcomed, but the response from investors has been notably restrained.
South Korea’s benchmark Kospi index remains about 26 per cent below its record reached in June, despite the country’s shares having been among the world’s strongest performers this year. Samsung Electronics and SK Hynix together account for almost half of the index.
The muted market reaction has focused attention on President Lee Jae Myung’s Value-Up programme, introduced to encourage better corporate governance, more efficient capital allocation and stronger protection for minority shareholders.
Clarence Li, lead portfolio analyst at T Rowe Price, said the valuation gap was unlikely to disappear simply because the two chipmakers were returning more cash.
“It remains partly structural and will require sustained evidence across a much broader group of companies to participate,” he said, describing the payouts as a step in the right direction.
Samsung and SK Hynix payouts under scrutiny
Samsung has outlined its biggest shareholder-return plan to date, estimating that it will distribute between 90 trillion won and 110 trillion won during 2026. About 30 trillion won is due to be paid in cash dividends during the third quarter, while the final allocation of the remaining funds is expected to be decided in January.
The company has also approved a share buyback worth about 15 trillion won for employee compensation. Samsung has said its wider policy includes dividends and share buybacks or cancellations, although investors have criticised the lack of a clearer commitment to repurchase and cancel shares for all shareholders.
Some analysts argue that a greater reliance on special dividends could disproportionately benefit members of Samsung’s controlling family, while doing less to alter the company’s ownership structure or improve the treatment of minority investors.
Samsung has rejected that interpretation, saying its shareholder-return decisions are made with shareholders at the centre. It has also said that the possibility of financial affiliates having to sell holdings to comply with ownership rules was not a factor in its decision-making.
SK Hynix has taken a more explicit approach to buybacks. The memory-chip maker announced in August that it would repurchase and cancel shares worth 40 trillion won, while raising its target for shareholder returns to more than 50 per cent of cumulative free cash flow between 2025 and 2027.
The company said additional payments could combine share buybacks, cancellations and dividends, depending on cash flow, market conditions and distributable profits.
South Korean companies have announced 39 trillion won of share buybacks so far this year, according to Korea Exchange data, exceeding the combined total for 2024 and 2025. Even so, participation in the Value-Up programme remains voluntary, leaving investors uncertain whether the wider market will follow the lead of the two chipmakers.
Sammy Suzuki, head of emerging markets equities at AllianceBernstein, said the size of the payouts reflected the strength of the current memory-chip cycle as much as any fundamental shift in corporate policy.
Other investors continue to point to concentrated ownership, weak board oversight and concerns over chaebol governance as obstacles to a lasting re-rating of Korean shares.
Yi Ping Liao, a portfolio manager at Templeton Global Investments, said the responsibility now rested with companies to deliver on their own plans.
“It’s moved from policy reform to proof of execution,” she said.
