The funding will come from approximately KRW 20 trillion in net proceeds from the sale of Kioxia shares, with about 80% slated for return to shareholders. Earlier, the company pledged to allocate more than 50% of its free cash flow from 2025 to 2027 to shareholder returns and suspended its subsidiary Solidigm's planned U.S. IPO, drawing close attention to its capital allocation strategy.
SK Hynix stands at a pivotal juncture in its major shareholder‑return decision. The world's leading memory‑chip manufacturer confirmed Monday that, alongside its third‑quarter earnings release on Wednesday, it will unveil a shareholder‑return plan—widely expected to include a special dividend totaling as much as 16 trillion won (approximately $12.1 billion).
According to South Korea's Dong-A Ilbo, citing sources familiar with the investment banking industry, the special dividend will be funded by proceeds from SK Hynix's sale of its stake in Japanese memory‑chip maker Kioxia. Estimates indicate that SK Hynix gradually liquidated its Kioxia holdings in the first and second quarters of this year; after deducting its original investment cost, the total net gain is roughly 20 trillion won (about $15.1 billion). The proposed special dividend of 16 trillion won would amount to approximately 80 percent of that net profit. Meanwhile, Reuters reported that when asked by the stock exchange operator about these reports, SK Hynix stated it is "reviewing various shareholder‑return measures" and plans to disclose its decision alongside its quarterly earnings report on Wednesday.
The news boosted market sentiment. On Monday, SK Hynix's share price surged more than 2% at one point, defying the broader market trend, while South Korea's KOSPI index fell by over 1% during the same period. This statement also underscores the mounting pressure on the company to deliver stronger shareholder returns, amid robust profits in AI‑related memory chips yet a sharp pullback in its stock price.
Kioxia Exits: A Six-Year-Long Investment Has Been Realized
The funding for this special dividend can be traced back to SK Hynix's six-year strategic investment in Kioxia.
In 2018, Bain Capital led a consortium of investors from the United States, Japan, and South Korea to acquire Toshiba's storage business—later known as Kioxia. SK Hynix, through two special purpose companies (SPCs), purchased both shares of Kioxia and convertible bonds, investing a total of approximately 4 trillion Korean won.
As Bain Capital has gradually sold off its remaining stake in Kioxia this year, SK Hynix has also completed a full exit from the company. According to Reuters, SK Hynix has not yet disclosed the specific details of this equity sale; however, analysts estimate that the company has realized substantial cumulative investment gains—according to an article by Wallstreetcn, citing sources familiar with the matter, the combined net profit for the two quarters is approximately 20 trillion won (about $15.1 billion).
If the final special dividend amounts to the reported KRW 16 trillion, it would represent roughly 80% of the company's net profit, underscoring management's intention to return the vast majority of its exit proceeds directly to shareholders.
Shareholder Pressure: Return Expectations Amid the AI Dividend
SK Hynix's response to the 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 the surge in demand for AI memory chips, with profits at one point reaching record highs. However, since hitting an all-time high in June, SK Hynix's stock price has fallen sharply, partly due to investor concerns about the sustainability of U.S. tech companies' AI capital expenditures, which has further heightened market expectations that the company will increase cash returns.
SK Hynix has previously implemented a series of shareholder‑return initiatives. In August this year, the company announced that it would repurchase and cancel treasury shares worth KRW 40 trillion, and pledged to allocate more than 50% of its free cash flow generated between 2025 and 2027 to enhancing shareholder returns.
Meanwhile, SK Hynix announced last Friday that, due to market volatility, it has suspended the planned U.S. IPO of its chip subsidiary, Solidigm—after concerns from investors and regulators about the potential listing had weighed on SK Hynix's share price. The suspension of Solidigm's IPO, coupled with expectations of a special dividend, has further heightened market scrutiny of the company's capital allocation strategy.
The outcome will be clear on Wednesday: financial results and shareholder returns will be disclosed simultaneously.
All suspense will be lifted on Wednesday, October 28, when SK Hynix releases its third-quarter earnings report and simultaneously unveils the details of its shareholder return plan.
At present, SK Hynix has only stated that it is "reviewing various shareholder‑return measures," using language that leaves room for interpretation, and has not confirmed the size or form of any special dividend. The market will be closely watching to see whether the company formally announces a special dividend and whether the specific amount aligns with the KRW 16 trillion reported by the Dong-A Ilbo.
Analysts believe that Wednesday's announcement goes beyond a one-time cash distribution, offering the market a critical window into how SK Hynix is balancing capital expenditures, shareholder returns, and strategic reserves at the peak of the AI cycle.
Editor/joryn