As of the end of June, retail shareholders reached a record high of 7,971,242 for Samsung Electronics and 3,461,526 for SK hynix. (Photo = Solution News)
Samsung Electronics and SK hynix saw more than 6 million retail shareholders added in just the first half of this year. The two leading domestic semiconductor stocks have both risen into the ranks of “national stocks.” The semiconductor boom and stock price gains are seen as having drawn in individual investors.
According to semiannual reports disclosed on the 14th, Samsung Electronics had 7,971,242 retail shareholders at the end of June, an all-time high. That was up by about 3.77 million in just six months from 4.19 million at the end of last year.
SK hynix had 3,461,526 retail shareholders. That was more than five times the roughly 680,000 recorded a year earlier, and up by more than 2.27 million in just six months compared with about 1.18 million at the end of last year.
The shares held by retail investors account for 66.24% of Samsung Electronics and 67.98% of SK hynix. In both companies, individuals own roughly two-thirds of the outstanding shares.
Why have investors flocked to semiconductors?
Retail money flowed in first on the back of improved earnings. Samsung Electronics posted operating profit of 14.67 trillion won in the first half. SK hynix earned 9.8 trillion won over the same period. The rise was led by high bandwidth memory (HBM), used in AI servers.
Stock prices also rose sharply. SK hynix, which traded around 200,000 won in 2024, briefly surpassed 1 million won intraday in February this year and climbed to 2,987,000 won on June 25, lifting its market capitalization beyond 200 trillion won.
Samsung Electronics’ share price rose from the 50,000-won range at the end of 2024 to above 100,000 won by the end of last year. On June 19 this year, it hit a record high of 374,500 won.
Supply-demand conditions also supported the stock rally. As major U.S. tech companies expanded investment in AI data centers, memory demand outpaced supply. HBM has a more complex production process than ordinary DRAM, so capacity expansion is slower, and because supply contracts are largely long term, earnings are considered more predictable.
Brokerages also point to household funds moving into equities from bank deposits and real estate. Although some shareholders took profits during the rally, new investors entered in even larger numbers.
11 million shareholders are shaping companies
Combined, the two companies have 11.43 million retail shareholders. Even accounting for investors who own both names, that means roughly one in every four to five adults is a semiconductor shareholder.
The term “national stock” originated in the 1980s, when shares of POSCO and Korea Electric Power were offered to the public. The difference is that back then the government led the spread, while this time individuals bought shares directly in the market.
As retail ownership has exceeded two-thirds, demands for dividends and treasury share cancellations are also growing. Analysts say the pressure on companies is now different, since the demands once led by a small number of activist funds are now coming from millions of individual shareholders.
SK hynix is expected to finalize and announce additional shareholder-return measures next month. Samsung Electronics is preparing a plan to enhance shareholder value that balances reinvestment and returns.
Market watchers say what is needed is a predictable principle rather than one-off expansion. The reason is that only when rising profits are tied to stronger returns can individual money be transformed into long-term capital. U.S. megacap tech stocks have similarly retained individual investors for years through steady buybacks and dividend policies.
As electronic voting and online shareholder meetings spread, channels for millions of shareholders to exercise voting rights are widening. There is also speculation that individual votes could become a variable in dividend policies and director-election proposals.
As individual funds concentrate in the two largest market-cap stocks, the degree to which the entire index is tied to the semiconductor cycle is also increasing. If the two stocks correct, both the KOSPI and household wealth could be shaken together.
How can investors prepare for a cyclical downturn?
Memory semiconductors are a cyclical industry with large price swings. Whenever expansion battles overlap with weakening demand, prices have fallen sharply. A representative example is the rapid cooling of the industry right after the 2018 boom.
Many of the shareholders who entered this year did so after prices had already risen significantly. There is concern that if the industry turns downward, investors who came in late could face larger losses.
The investment industry advises individual investors to diversify by setting a cap on exposure to any single stock, buy in installments, and check leading indicators in advance. Quarterly results such as the share of HBM revenue, capital expenditure, and trends in fixed memory contract prices are cited as basic indicators for judging the industry cycle.
There are also calls for institutional reforms. Measures discussed include systems that make disclosure information easier to understand, tax incentives that favor long-term holdings, and board structures that better protect the interests of general shareholders. In the United States, a lower capital gains tax rate is applied to stocks held for more than one year to encourage long-term investment.
Experts say that if dividends and treasury share cancellations continue steadily, they can serve as a buffer to reduce shareholder exits during downturns. The way profits earned during boom periods are distributed will determine the shareholder base during slumps, they add.
Whether the rise in retail shareholders will continue depends on the industry cycle and shareholder-return policies. The shareholder-return plans that the two companies are expected to unveil around next month will likely be the first benchmark.