A symbol of undervaluation turns model citizen
Samsung Electronics is South Korea's largest company by market value and, for years, the most frequently cited example of the "Korea discount"—the phenomenon whereby Korean firms trade at persistently lower valuations than international peers. Despite holding world-leading technology and market positions in memory chips, smartphones and displays, Samsung's price-to-book ratio (PBR) languished below 1 for years, marking it as a company valued at less than the worth of its own assets.
In 2023 the South Korean government, drawing on Japan's precedent, formally unveiled its "Corporate Value-Up Programme", igniting a national debate about how to close the discount that afflicts the country's stockmarket. Samsung sat at the centre of that debate. A single company's actions could move more than 20% of the KOSPI's total market capitalisation.
Beginning with the announcement of a 10 trillion won ($7.3bn) share buy-back in November 2024, followed by a first tranche of 3 trillion won in cancellations in February 2025, and culminating in a record 16 trillion won cancellation plan in March 2026, Samsung has progressively expanded its shareholder returns over three years—putting flesh on the bones of what might be called the "Samsung-style value-up".
The business and its earnings
Value creation presupposes that a company makes money. Samsung's capacity to reward shareholders is bound tightly to the semiconductor cycle. Understanding its business mix and earnings rhythm is essential to reading the rest of its value-up history in context.
Four pillars
Samsung is divided broadly into four segments. The Device Solutions (DS) division houses the semiconductor business: memory chips (DRAM, NAND flash and HBM), foundry (contract manufacturing) and System LSI (in-house chip design). It accounts for the overwhelming share of operating profit and is the principal source of funds for shareholder returns. The Device eXperience (DX) division comprises the Mobile eXperience unit (Galaxy smartphones and tablets) and the Visual Display/Digital Appliances unit (televisions and home appliances). Samsung Display Corporation (SDC) supplies OLED panels for smartphones and laptops, while Harman, an American subsidiary, handles automotive audio and connected-car solutions.
Of these, the DS division—and memory chips in particular—dictates the direction of group earnings. When the DS division slipped into the red during the 2023 chip downturn, group operating profit collapsed to 6.6 trillion won, prompting the suspension of special dividends and the disappearance of any capacity for buy-backs. Conversely, the record operating profit of 57.2 trillion won in the first quarter of 2026 reflected surging sales of high-bandwidth memory (HBM) and rising DRAM prices.
Memory chips: a structural growth phase opened up by AI
Samsung holds the world's largest production capacity in both DRAM and NAND flash. The memory business was once regarded as a "rollercoaster industry", its fortunes swinging wildly with the price cycles of commodity products. But the surge in AI infrastructure investment that gathered pace from 2025 onwards is reshaping that picture.
HBM is central. A type of ultra-fast, high-capacity memory installed in AI accelerators (GPUs and NPUs), HBM commands roughly five times the value-added of standard DRAM. In 2026 Samsung became the first in the industry to begin mass production of HBM4, its sixth-generation HBM. It is expanding supply of HBM3E to big-tech ASIC makers such as Google, Amazon and Microsoft, and is pushing to enter Nvidia's HBM4 supply chain. KB Securities forecasts that Samsung's HBM revenue in 2026 will triple year-on-year to around 26 trillion won. Samsung itself expects HBM revenue to more than triple from 2025 levels and is pre-emptively expanding capacity.
Foundry: long struggles, and a fork in the road
The foundry business—contract chip manufacturing—is at once the "unfinished task" of Samsung's value-up effort and its single largest potential growth driver. Taking designs from fabless chip-design firms and producing the actual chips, Samsung ranks second in the world behind Taiwan's TSMC.
Yet the gap is vast. As of the third quarter of 2025, TSMC held 71.0% of the global foundry market against Samsung's 6.8%. Yield problems at the 3- and 4-nanometre nodes left Samsung unable to win large big-tech orders, and despite multi-trillion-won capital outlays the division ran operating losses for years.
The turning point came into view from 2025. Samsung secured a long-term supply contract with Tesla worth roughly $16.5bn (23.9 trillion won) running from July 2025 to 2030. It brought forward its target for a return to profit in the foundry division from 2027 to 2026, and aims to reach 20% market share by 2027. An advanced foundry plant under construction in Taylor, Texas, is a cornerstone of this strategy.
How the earnings cycle drives shareholder returns
Samsung's capacity for value creation is, then, directly tied to the chip cycle. The plunge in free cash flow during the 2023 downturn made special dividends impossible; conversely, the record first-quarter 2026 operating profit of 57.2 trillion won made both the 16 trillion won cancellation and a record dividend feasible. The link is concrete.
Year | Operating profit | Key shareholder-return measures
2022 | 43.4tn | Regular dividend 9.8tn 2023 | 6.6tn | Regular dividend 9.8tn (FCF plunged, no special dividend) 2024 | 32.7tn | Dividend 9.8tn + 10tn buy-back announced 2025 | 43.7tn | Dividend 11.1tn (including special dividend) + 5.4tn cancellation 2026 (Q1) | 57.2tn (record quarter) | 16tn cancellation decided
The value-up journey
Where Samsung stood when the government acted in 2023
When the government formalised its value-up programme in 2023, Samsung's position was complicated. The chip downturn cut 2023 operating profit by nearly 85% year-on-year, and the share price slid to around 52,000 won, retreating to pre-pandemic levels. Its PBR oscillated between roughly 1.0 and 1.2, repeatedly threatening to break below 1.
At the time, Samsung was concluding the three-year (2021–23) shareholder-return policy fixed in 2021. It paid a fixed regular dividend of 1,444 won per common share while pledging to return at least 50% of free cash flow. But with free cash flow shrinking during the downturn, no special dividend was paid after 2022. The market's verdict was frosty: foreign and domestic institutional investors alike complained that "the dividend is steady, but there is no will to support the share price".
The 2024 no-show: the meaning of silence
As the government's programme got into full swing in 2024, listed companies queued up to file value-up disclosures. Samsung, however, made no formal value-up disclosure throughout the year. With the market's keystone company absent, analysts noted that participation amounted to just 45% of total market value—and openly circulated estimates that the figure would rise to 77% if Samsung and six other large-caps joined.
Samsung never officially explained its absence. The prevailing interpretation in the industry was that the uncertainty surrounding the chip cycle made it hard to commit publicly to medium-term targets, and that the company preferred to manage its forthcoming three-year policy separately from the disclosure framework.
The silence disappointed the market. Foreigners kept selling, and the share price spent 2024 oscillating between rallies and corrections, finding no clear direction.
November 2024: a 10 trillion won buy-back signals a turn
On 15 November 2024 Samsung's board approved and disclosed a buy-back plan totalling 10 trillion won. A first tranche of 3 trillion won (50.14m common shares and 6.91m preferred shares) was to be acquired immediately and cancelled; a decision on how and when to use the remaining 7 trillion won was deferred to a future board resolution.
The shares jumped more than 5% intraday on the day of the announcement. The market responded forcefully, calling it the largest buy-back since 2017. Foreign buying flowed in, and the very figure of "10 trillion won" stamped Samsung's commitment to shareholder returns on investors' minds.
Yet the undetermined fate of the remaining 7 trillion won left uncertainty. Critics noted that share purchases without a cancellation pledge keep open the option of "buy then deploy", and so are hard for the market to accept as a genuine return of capital.
February 2025: the first 3 trillion won cancellation completed
On 18 February 2025 Samsung's board resolved to cancel the entirety of the shares acquired under the November 2024 decision (2.7342 trillion won of common shares plus 314.5bn won of preferred shares, totalling roughly 3.0485 trillion won). The cancellation was completed via the Korea Securities Depository on 20 February.
By reducing the total number of shares outstanding, a cancellation lifts earnings per share and net asset value per share—a different route to enhancing shareholder value than dividends. The market read this cancellation as a signal that Samsung had moved beyond buying merely to prop up the share price and had delivered a real return of capital.
But an unexpected side issue surfaced. As the cancellation cut total shares outstanding, the stakes held in Samsung Electronics by Samsung Life Insurance (8.51%) and Samsung Fire & Marine (1.49%) rose automatically, approaching the 10% ceiling that the Financial Industry Structural Improvement Act imposes on financial firms' holdings in non-financial companies. Depending on legislative developments, these insurers could be forced to dispose of excess stakes—a governance risk tied to the possible dilution of the founding family's control.
Higher dividends in 2025: 1,668 won per share, 11.1 trillion won total
Samsung's total dividend for 2025 was set at 11.1 trillion won. The per-share dividend rose 15.3% from 1,446 won in 2024 to 1,668 won, including a special dividend of 1.3 trillion won—the first since 2021—on top of the regular dividend. The payout ratio came to 25.1%.
The company also disclosed progress on its 2024–26 three-year policy. Over 2024 and 2025 it paid out 20.9 trillion won in cash dividends (19.6 trillion won regular plus 1.3 trillion won special) and completed 8.4 trillion won of share cancellations.
The earnings recovery underpinned the larger returns. Operating profit rose from 32.726 trillion won in 2024 to an estimated 43.74 trillion won in 2025, and the restored financial headroom made resumption of the special dividend possible. Return on equity recovered from 9.0% in 2024 to 10.9% in 2025.
March 2026: a 16 trillion won cancellation—a historic decision
On 10 March 2026, in its 2025 annual report, Samsung announced its largest-ever cancellation plan. Of the 105.43m treasury shares it held at the end of 2025, it would cancel 87m—82.5% of the total (73,359,314 common and 13,603,461 preferred shares)—within the first half of 2026. At the prevailing closing price this was worth around 16 trillion won.
The announcement was read as, in effect, a pledge to cancel all of its treasury stock, including the 7 trillion won left undecided from the November 2024 buy-back plan. The market judged that Samsung had "tackled head-on the controversy over using treasury shares as a shield for control". The 57th annual general meeting on 18 March formally approved the plan. Jun Young-hyun, vice-chairman and chief executive, said he would "fulfil our promise to shareholders and help raise the value of each share".
Analysts also pointed to a regulatory shift—a third amendment to the Commercial Act making the cancellation of treasury shares mandatory—as a factor behind the move. External rules and internal will, in other words, had aligned.
Aligning staff incentives: "internal value-up"
In parallel with larger shareholder returns, Samsung shifted employee compensation towards share-linked rewards. After piloting in 2024 an option for executives to receive their profit-sharing bonus in shares, it extended the scheme to all employees from 2025. By aligning staff interests with those of shareholders, the measure is seen as a structural support for the durability of the value-up policy.
Strengthening board independence
Governance has also evolved. After separating the roles of chief executive and board chairman in 2018, with an independent outside director taking the chair, Samsung has steadily increased the proportion of outside directors (the 2025 board comprises three inside and six outside directors). Its outside-director nomination committee is composed entirely of outside directors, institutionalising the independence of nominations.
Tasks and assessment
The road ahead
As of 2026 Samsung's value-up effort stands at an inflection point, moving from a phase of "execution" to one of "testing for sustainability". With the 2024–26 three-year policy drawing to a close, the contents of the next policy for 2027–29 are the market's chief preoccupation.
On the first-quarter 2026 earnings call, chief financial officer Park Soon-cheol confirmed that the company would "faithfully execute the shareholder-return policy already promised", but on the next policy said only that it was "under discussion", withholding specific figures. With first-quarter 2026 operating profit reported as a record—up 756.1% year-on-year—expectations run high.
There are three things to watch on shareholder returns: whether the free-cash-flow payout ratio will be raised above the existing 50%; whether share cancellations will become a mandatory, regular policy rather than a one-off event; and whether Samsung will formally join the government's value-up disclosure programme.
Yet whether the market awards Samsung a higher earnings multiple depends less on its payout policy than on a qualitative shift in its business mix. The root of its valuation discount comes down to two things.
The first is the durability of structural growth in memory. The world-first mass production of HBM4 in 2026 and the forecast tripling of HBM revenue show that the market has begun to re-rate Samsung's memory business as a beneficiary of AI infrastructure rather than a commodity-cycle company. How long that re-rating lasts—that is, the depth and persistence of the AI data-centre investment cycle—is the key variable determining the multiple on the memory business. The development of HBM4E and the expansion of custom HBM accelerate the shift towards a higher-value portfolio, beyond mere price cycles.
The second is a return to profit in the foundry division. Foundry has been the "sore finger" eroding group profitability for years. In 2025 the gap between TSMC's 71% share and Samsung's 6.8% exceeded tenfold. The Tesla contract, progress on the 2nm node and the ramp-up of the Taylor fab in Texas are the three pillars of a hoped-for return to profit in 2026. The moment foundry turns profitable, Samsung could shed the market's perception of it as a "memory-only company" and be re-rated as an integrated device manufacturer (IDM). That would be more than an earnings improvement—a structural change capable of lifting the valuation multiple itself. Hence the market's focus on the foundry's turnaround.
Assessment
Samsung's value-up journey has had a consistent direction, but its pace and methods have at times jarred with market expectations. The no-show on the 2024 disclosure left a symbolic disappointment, and the failure to commit immediately to cancelling the remaining 7 trillion won of the 10 trillion won plan fed uncertainty. In the end, though, Samsung kept its word, and the decision to cancel 16 trillion won restored market confidence through "deeds rather than words"—the prevailing verdict.
By the end of 2025 Samsung's PBR stood at around 2.5, a marked improvement on past lows of about 0.9. Major brokers such as Eugene Investment & Securities forecast a 2026 PBR of 1.8 to 2.0, arguing that a chip boom combined with a surge in return on equity (an estimated 27.3% in 2026) could allow a return to historic-high PBR levels. The foreign ownership ratio also recovered, to 51.9% as of January 2026.
Since the launch of the Korea Value-Up Index in September 2025, the index has returned 274% on a cumulative basis, accelerating a broad market shift towards closing the discount. Samsung is judged less as the leader of this trend than as a company that "followed along and then stepped to the front at the decisive moment". How the "Samsung value-up model"—a three-year policy framework, phased share cancellations and the resumption of special dividends—imprints itself on global institutional investors will be decided in earnest when the next three-year policy is unveiled in 2027.
Controversies and limits
A bonus dispute: shareholders versus staff
In May 2026 Samsung's record earnings rebound triggered an unexpected internal conflict. The Samsung Electronics branch of the Samsung Group Super-Enterprise Union—the company's majority union—voted to strike, demanding a bonus equal to 15% of operating profit (around 45 trillion won). Management was cautious, citing the strain on the business, supply-chain disruption and the impact on shareholders and the national economy.
A minority-shareholder group, the Korea Shareholder Activism Headquarters, warned of legal action against both the board and the union, arguing that the demand violated the principle of capital adequacy under the Commercial Act. Some shareholders argued that, in an era of 200 trillion won in operating profit, the company should raise dividends rather than bonuses.
The dispute is read as exposing a structural limit of value-up policy: who, between shareholders and employees, captures how much of the fruits of higher corporate value. Samsung cannot dodge this question as it designs its next shareholder-return policy.
The 7 trillion won question: buy-backs without a cancellation pledge
In the 10 trillion won buy-back announced in November 2024, only the first 3 trillion won came with an immediate cancellation pledge; the remaining 7 trillion won was described merely as something the company would "discuss using from a shareholder-value perspective". Though this ultimately led to the 16 trillion won cancellation of March 2026, critics noted at the time that the open possibility of using the shares for compensation made it hard to treat as a full return of capital. The market increasingly calls for buy-backs to be accompanied by a cancellation pledge at the point of purchase, to bolster the credibility of treasury-share policy.
The disclosure gap: form versus substance
Samsung did not join the government's value-up disclosure programme in 2024. Despite running shareholder-return policies worth tens of trillions of won in substance, it neglected the formal duty of disclosure. This deprived the wider value-up ecosystem of a "shareable benchmark". Given how much Samsung's participation would influence the industry as a whole, both regulators and investors are urging it to join the disclosure programme promptly.
The "Samsung Life law" and the governance link
Cancelling treasury shares is an orthodox tool for enhancing shareholder value, but Samsung's idiosyncratic ownership structure produces unexpected ripple effects. After the large-scale cancellation, the stakes held by Samsung Life and Samsung Fire & Marine approached the 10% ceiling of the financial-industry act, raising the prospect that passage of the so-called "Samsung Life law" could force the sale of tens of trillions of won in additional shares. The point lays bare the structural tension between preserving the founding family's control and enhancing shareholder value.
Key figures at a glance
Item | 2022 | 2023 | 2024 | 2025 | 2026 (in progress)
Dividend per share (won) | 1,444 | 1,444 | 1,446 | 1,668 | TBD Total dividends | ~9.8tn | ~9.8tn | 9.8tn | 11.1tn | TBD Special dividend | — | — | — | 1.3tn | TBD Share cancellations | — | — | 3tn (1st) | 5.4tn (2nd) | 16tn (3rd, planned) Operating profit | 43.4tn | 6.6tn | 32.7tn | 43.7tn | 148tn (est.) ROE | — | 4.1% | 9.0% | 10.9% | 27.3% (est.) PBR | ~1.2 | ~1.0 | 0.9 | 2.5 | 2.0 (est.)
Figures are based on disclosures and broker reports (Eugene Investment & Securities, as of January 2026). Cross-check against original DART filings before use.
*This article is part of the "Value-Up Files" series. Figures are as of the time of disclosure and may require updating as policies change.*