Key Points:
- Samsung Electronics is set to receive $4.3 billion in dividends from Samsung Display to support semiconductor expansion.
- Samsung Display approves dividend distribution of 6.65 trillion won ($5 billion), marking its first dividend decision since 2012.
- Samsung Electronics, which holds an 84.8% stake in Samsung Display, will use dividends to finance capital expenditures in semiconductor production.
- Proceeds from dividends and loans will bolster funding for Samsung Electronics’ semiconductor plants amid declining operating profit.
Samsung Electronics Co., the leading global memory chipmaker, is poised to receive dividends worth approximately 5.64 trillion won ($4.3 billion) from its subsidiary Samsung Display Co. According to industry insiders, the funds are earmarked to bolster Samsung Electronics’ semiconductor production facilities.
During its general shareholders meeting on March 19, Samsung Display approved a dividend distribution of 6.65 trillion won ($5 billion), representing a 119.4% payout ratio, marking the first dividend decision since its spin-off from Samsung Electronics in 2012.
With an 84.8% stake in Samsung Display, Samsung Electronics stands to benefit significantly from the dividend payout. Meanwhile, secondary battery manufacturer Samsung SDI Co., owning a 15.2% stake in Samsung Display, is set to receive 1.01 trillion won in dividends. The substantial proceeds from the dividend will be channeled towards Samsung Electronics’ capital expenditure, particularly in domestic semiconductor production, with investments exceeding 5 billion won annually.
As of the end of 2023, Samsung Electronics’ Korean headquarters reported 6.11 trillion won ($4.6 billion) in cash equivalents on an unconsolidated basis and 91.77 trillion won ($68.9 billion) on a consolidated basis. In comparison, Samsung Display held cash equivalents amounting to 32.79 trillion won ($24.6 billion) on a consolidated basis by the end of 2023.
Samsung Electronics Korean headquarters accumulated approximately 29 trillion won ($21.8 billion) in dividends from overseas affiliates and secured a 20 trillion won ($15 billion) loan from Samsung Display in the previous year.
In light of these financial maneuvers and considering a 16% decline in operating profit to 43.48 trillion won ($32.7 billion) in 2023, Samsung Electronics contemplated issuing corporate bonds last year. However, an investment banking source revealed that the company deferred the bond issuance plan after collecting dividends from overseas units.
