Samsung intends to execute a 90 trillion won stock buyback to finance a bonus for its chip workers.

      Samsung Electronics is set to initiate a share buyback program valued at approximately 90 trillion won, representing one of the largest repurchase efforts attempted by a South Korean firm, as reported by Yonhap News Agency on Wednesday, citing unnamed industry sources.

      At the current exchange rate, this amount translates to around $58.61 billion, and the announcement led to a more than 6% increase in Samsung's stock in Seoul. The buyback is less a sign of confidence in share prices and more a financial obligation, intended to provide shares owed to its employees.

      Recently, the company reached an agreement to allocate about 10.5% of its operating profit as a special stock bonus for staff in its Device Solutions semiconductor division, which will be paid in shares rather than cash. Samsung intends to repurchase treasury stock to distribute, which is the purpose behind the 90 trillion won.

      The financial calculations are significant. Yonhap estimated the total bonus expense at approximately 154 trillion won over three years, factoring in the nearly 40% withholding tax applicable to the payments.

      The share repurchases are expected to occur in phases over three years, beginning as early as July, pending a board resolution and other formalities, according to the report. Employees will be permitted to sell one-third of their bonus shares immediately, another third after one year, and the final portion after an additional year, a vesting schedule aimed at managing market supply.

      The agreement was achieved after considerable effort. Samsung's largest union had prepared for an 18-day strike, with the country's prime minister warning of potential daily losses of $668 million, until mediating government talks resulted in a tentative agreement in May. Workers had initially sought 15% of operating profit in their contracts, while Samsung proposed 10%. The final figure of 10.5% is closer to Samsung’s stance than the union’s, yet acknowledges the principle of profit-linked compensation.

      The magnitude of the bonus is reflective of the substantial profits supporting it. Samsung's memory sector has greatly benefited from the demand for high-bandwidth memory that powers AI accelerators, a segment that has positioned Korea’s chip manufacturers as major players on the Kospi index.

      This surge has also reshaped the competitive landscape. Memory rival SK Hynix has surpassed Samsung as Korea's most valuable publicly listed company for the first time in over twenty years, owing to its leadership in HBM technology.

      Beyond the wage agreement, a buyback of this magnitude conveys another message for Samsung. South Korean conglomerates have historically faced pressure from investors regarding the so-called Korea discount— the persistent disparity between asset values and share prices, often attributed to inadequate shareholder returns.

      A repurchase nearing 90 trillion won, even if it is motivated by a bonus obligation, aligns with the type of capital return that foreign investors have long advocated for.

      The plan has not yet been officially confirmed by Samsung. The company has not verified the program, and Yonhap characterized it as a decision anticipated to be approved by the board rather than one already finalized.

      The expected board resolution, possibly occurring as soon as next month, will mark the transition of the 90 trillion won figure from a report to a formal commitment. Until then, the number remains based on industry sources, with the specific dollar value shifting according to the won's trading rate on the day payments are made.