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Samsung Electronics to Receive $4.3 Billion Dividend from Samsung Display for Chip Production

Samsung Display's dividend payout is set to boost Samsung Electronics’ semiconductor manufacturing investments
South Korea
s 005930.KO Blue Chip 150 Semicon 75 Tech 350 OM 60
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Samsung Electronics Co. is poised to bolster its semiconductor manufacturing capabilities with an infusion of approximately 5.64 trillion won ($4.3 billion) in dividends from its subsidiary, Samsung Display Co. This significant financial boost, confirmed during Samsung Display’s recent general shareholders meeting, marks a pivotal moment as the display manufacturer declares its first-ever dividend since its inception in 2012.

The announced dividend distribution totals a staggering 6.65 trillion won, adhering to a 119.4% payout ratio, reflecting Samsung Display’s robust financial health and its strategic role within the Samsung conglomerate. Owning an 84.8% stake in Samsung Display, the world’s leading memory chip manufacturer stands to significantly enhance its capital expenditure, particularly in expanding its domestic semiconductor production facilities, which consistently demand substantial investment exceeding 5 trillion won annually.

Samsung SDI Co., holding a 15.2% stake in the display maker, is also set to benefit, expecting to receive dividends amounting to 1.01 trillion won. This redistribution of profits underscores the synergistic financial strategies employed within the Samsung group, aimed at reinforcing their market-leading positions in both the semiconductor and display sectors.

On the financial front, Samsung Electronics reported having 6.11 trillion won in cash equivalents on an unconsolidated basis and a hefty 91.77 trillion won on a consolidated basis at the end of 2023. Meanwhile, Samsung Display boasted a substantial 32.79 trillion won in cash reserves, further evidencing the conglomerate’s solid financial foundation.

In a strategic move to shore up funds for its semiconductor ventures, Samsung Electronics had previously amassed around 29 trillion won in dividends from its international affiliates, complemented by a substantial 20 trillion won loan sourced from Samsung Display in the preceding year.

Speculations are rife that Samsung Electronics may resort to issuing corporate bonds in the upcoming year, a strategy considered in 2023 but ultimately shelved due to the successful dividend collections from overseas subsidiaries, despite a 16% dip in operating profits to 43.48 trillion won. This potential bond issuance reflects the ongoing strategic financial planning Samsung engages in to sustain and expand its semiconductor production prowess, ensuring its continued leadership in the global technology arena.

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