Samsung Electronics and SK hynix paid a combined 11.21 trillion won, or about $8.4 billion, in corporate taxes during the first half of the year, underscoring the extraordinary profit surge sweeping South Korea’s semiconductor industry.
As of Aug. 31, the two chip makers’ combined tax payments had jumped 167% from a year earlier, when they paid 4.19 trillion won, or about $3.2 billion. The latest figure was the second-highest first-half total on record, behind the 12.66 trillion won, or roughly $9.5 billion, paid during the first half of 2019.
Samsung Electronics paid 3.99 trillion won, or about $3.0 billion, while SK hynix paid 7.22 trillion won, or roughly $5.4 billion.
The surge reflects the dramatic recovery in the semiconductor industry, where booming demand for advanced memory chips used in artificial-intelligence systems has driven profits sharply higher.
South Korean companies with December year-ends generally settle their previous year’s corporate-tax liability in March and make an interim payment in August. The tax payments reported this year reflect the final settlements made in March.
The companies’ latest earnings point to potentially much larger tax bills ahead. Samsung Electronics and SK hynix posted first-half operating profits of 146.7 trillion won and 98.2 trillion won, respectively, according to figures used in calculating their interim tax payments.
Those profits were roughly six to 13 times higher than a year earlier, illustrating the scale of the current semiconductor upcycle.
If earnings momentum continues, the two companies’ annual corporate-tax payments could surpass their previous combined record of 15.64 trillion won, or about $11.8 billion.
Some projections have suggested that their annual tax payments could eventually approach 100 trillion won, or roughly $75 billion, if the current earnings boom persists.
The semiconductor rally has also produced a sharp change in investor activity surrounding the two companies.
Interest in leveraged and inverse investment products tied to Samsung Electronics and SK hynix has fallen sharply since South Korean financial authorities tightened regulations. From July 31 through Aug. 28, individual investors were net sellers of 1.77 trillion won, or about $1.3 billion, across 16 such products.
The regulatory change raised the minimum required deposit to 30 million won, or about $22,500, from 10 million won.
Average daily trading value during the period fell to about 1.01 trillion won, or $760 million, from roughly 11.68 trillion won, or $8.8 billion, before the new requirement took effect.
Trading volume therefore dropped to about one-nineteenth of its previous average, despite the continued strength of the underlying chip companies.
The divergence highlights two very different sides of South Korea’s semiconductor boom. Samsung Electronics and SK hynix are benefiting from surging demand and rapidly expanding profits, while regulators are moving to curb the speculative leverage that can amplify losses for individual investors.
For the South Korean economy, the boom is translating into more than record corporate earnings. The country’s two largest chip makers are also becoming a significantly larger source of corporate-tax revenue as the global AI investment cycle fuels demand for advanced memory.
