SK Hynix responds to "16 trillion won special dividend report": Shareholder return measures to be announced on Wednesday

SK Hynix is standing at a pivotal point regarding a major shareholder return decision. On Monday, the global leading memory chip manufacturer confirmed that it will announce shareholder return measures alongside its third-quarter financial results on Wednesday. Market expectations widely anticipate this will include a special dividend of up to 16 trillion won (approximately $12.1 billion).

Wall Street Insights reports that, according to sources from the investment banking industry cited by Korea’s Dong-A Ilbo, the funds for this special dividend come from the proceeds SK Hynix earned by selling its stake in Japanese memory chip maker Kioxia. It is estimated that SK Hynix fully liquidated its holdings in Kioxia over the first and second quarters this year, generating a total net profit of about 20 trillion won (approximately $15.1 billion) after deducting the original investment cost. The proposed 16 trillion won special dividend accounts for around 80% of these net earnings. Reuters reported that, when asked by the stock exchange operator about the relevant news, SK Hynix stated that it is “reviewing various shareholder return measures” and plans to announce them together with its quarterly report on Wednesday.

This news has boosted market sentiment. On Monday, SK Hynix’s share price rose by more than 2% at one point, outperforming the market while the Korea Composite Stock Price Index (KOSPI) dropped by over 1% during the same period. This response also reflects the increasing pressure SK Hynix faces to return value to shareholders against the backdrop of high profits from AI memory chips but a significant share price correction.

Kioxia Exit: Realizing a Six-Year Investment

The funding source for this special dividend traces back to SK Hynix’s six-year strategic investment in Kioxia.

In 2018, Bain Capital led a consortium of American, Japanese, and Korean investors to acquire Toshiba's storage business (which later became Kioxia). SK Hynix invested a total of about 4 trillion won in Kioxia shares and convertible bonds through two special purpose companies (SPCs).

As Bain Capital gradually sold off the last batch of Kioxia shares this year, SK Hynix also completed a full exit from the company. According to Reuters, SK Hynix has not yet disclosed the specific details of the stake sale, but analysts estimate that the company has confirmed significant cumulative investment gains—Wall Street Insights reports, citing informed sources, that net profits over the two quarters totaled about 20 trillion won (approximately $15.1 billion).

If the final special dividend reaches the reported 16 trillion won, this would account for about 80% of the net profit, demonstrating management’s intention to return the vast majority of exit proceeds directly to shareholders.

Shareholder Pressure: Payout Demands Under the AI Boom

SK Hynix’s response to rumors of a special dividend comes amid mounting pressure from investors.

As a core supplier to Nvidia, both SK Hynix and Samsung Electronics have benefited from surging demand for AI memory chips, which once drove profitability to record highs. However, SK Hynix’s stock price has fallen sharply since reaching an all-time high in June, partly due to investor concerns about the sustainability of U.S. tech companies’ AI capital expenditures, which has further intensified calls for greater cash returns from the company.

SK Hynix has already taken several actions to return profits to shareholders. In August this year, the company announced it would repurchase and cancel its own shares worth 400 billion won, and promised to allocate over 50% of free cash flow generated from 2025 to 2027 to boosting shareholder returns.

Meanwhile, SK Hynix announced last Friday that, due to market volatility, it had suspended the planned U.S. listing of its chip subsidiary Solidigm—a plan that had raised concerns among investors and regulators and pressured SK Hynix’s stock price. The suspension of Solidigm’s IPO, coupled with expectations of a special dividend, has further raised market attention on the company’s capital allocation strategy.

Revealed on Wednesday: Financial Results and Shareholder Returns Simultaneously Announced

All will be revealed on October 28 (Wednesday). SK Hynix will publish its third-quarter financial results and disclose the details of its shareholder return plan at the same time.

At present, SK Hynix has only stated that it is “reviewing various shareholder return measures,” leaving room for further clarification, and has not confirmed the scale or form of a special dividend. The market will closely watch whether the company will officially announce a special dividend and whether the specific amount will match the 16 trillion won reported by Dong-A Ilbo.

Analysts believe that Wednesday's announcement concerns not only a one-off cash distribution, but will also provide an important window for the public to observe how SK Hynix balances capital expenditure, shareholder returns, and strategic reserves during the peak of the AI cycle.