Samsung and SK Hynix are sitting on a combined $263 billion in projected net cash by year-end 2026. That figure alone exceeds Nvidia's entire estimated reserves by roughly $160 billion, yet the Korean chip giants are pouring profits back into factories instead of returning them to investors.
Both companies posted staggering results in July. SK Hynix saw operating profit jump 557% year-over-year, almost entirely from HBM chip demand feeding the AI accelerator frenzy. Samsung's numbers were similarly strong. The market response was brutal. Samsung shares fell roughly 37% from June peaks, SK Hynix dropped about 48%. Investors who watched those earnings calls grew impatient.
The Buyback Demand Intensifies
A retail investor group called ACT launched a formal campaign targeting Samsung in early August, calling for a $32 billion share buyback. The logic is straightforward: the stock is down, cash is abundant, and deploying some of that capital to support the share price makes financial sense. Currently both companies return roughly 50% of free cash flow to shareholders. Activists are pushing that toward 80%, a shift that would fundamentally reshape how Korean chipmakers balance balance sheets.
The tension is real. Samsung and SK Hynix have committed 3,200 trillion won to domestic AI-related investments. That's not pocket change. Building the fabs and R&D centers that keep these companies competitive requires capital that could otherwise go to dividends or buybacks. Korean corporate culture has historically favored builders over capital returners, a tendency that foreign institutional investors have increasingly challenged.
Cash Returns Versus Competitive Moats
The either-or framing misses something important. These companies generate massive cash precisely because they're building competitive advantages in HBM and next-generation chips. Pull back on capex now, and rivals catch up. That said, $263 billion is genuinely enormous, enough that both goals feel possible simultaneously.
The real question is whether Korean corporate governance shifts. Foreign institutional investors hold substantial stakes in both companies and have the voting power to force change. ACT's $32 billion buyback proposal won't pass without support from larger institutional holders. But the pressure is mounting, and Samsung's depressed valuation gives activists genuine ammunition. Expect this conversation to intensify heading into earnings season.
This article is informational only and does not constitute financial advice or investment recommendation.
