Samsung Electronics and SK Hynix have officially announced a record shareholder return policy worth up to 150 trillion won. This initiative aims to distribute the substantial profits generated from the artificial intelligence (AI) memory supercycle back to shareholders. This move is unprecedented in the South Korean capital market.
However, this bold step has drawn criticism, with some labeling it a 'money feast.' Skeptics question whether it undermines the company's future capital expenditures (CAPEX) and research and development (R&D) efforts.
One of the fundamental purposes of a corporation is to share its profits with shareholders. Therefore, gaining trust by prioritizing shareholder value in all circumstances is crucial. Shareholder returns during prosperous times serve as a foundation for enduring through downturns.
For instance, after generating significant profits following the launch of the iPhone, Apple began a major stock buyback and dividend expansion in 2012. At that time, critics warned that this would halt innovation and reduce R&D investment. The outcome, however, was different. Apple significantly boosted its earnings per share (EPS) through stock buybacks, attracting long-term capital based on strong shareholder trust. This trust helped Apple achieve a historic market valuation of over $3 trillion.
Similarly, Microsoft faced growth pains in the mid-2000s due to stagnation in the PC market and failures in mobile transition, yet it initiated a large-scale shareholder return. This trust allowed Microsoft to pivot towards a cloud-centric business model.
Strong shareholder trust forms the backbone of a company's fundamental strength. During economic downturns or unexpected external challenges, this trust acts as a robust support system against stock price declines. Conversely, when opportunities arise, it enables swift capital mobilization and a focus on innovation.
The 150 trillion won shareholder return aims to alleviate the 'Korea Discount' that has long weighed on the South Korean stock market and to establish a globally competitive level of shareholder trust, thereby strengthening the company's true resilience.
However, companies must not become so focused on distribution that they miss growth opportunities. To avoid being perceived as merely a benevolent gesture, they should solidify their financial structures and present innovative strategies for future visions. The AI market, too, will eventually mature and face a downturn. The considerations for both companies following this semiconductor boom are just beginning.
* This article has been translated by AI.
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