The combined net cash of Samsung Electronics and SK Hynix, calculated as cash and cash equivalents minus borrowings, is projected to exceed twice that of Nvidia by the end of the year.

Citing consensus estimates compiled by financial data provider LSEG, Reuters reported that the year-end net cash for Samsung Electronics and SK Hynix is expected to reach $164.1 billion (approx. 234 trillion won) and $99.3 billion (approx. 141 trillion won), respectively.

The combined total for the two companies stands at $263.4 billion (approx. 375 trillion won).

This is more than double the projected net cash of AI semiconductor leader Nvidia, which is estimated at $101.7 billion (approx. 145 trillion won).

It also surpasses the combined estimated net cash of six of the Magnificent 7 (M7) companies, excluding Nvidia.

Among those six firms, only Tesla ($10.6 billion) and Microsoft ($5.4 billion) are expected to post net cash.

In contrast, Apple (-$35.2 billion), Meta (-$80.2 billion), Alphabet (-$8.2 billion), and Amazon (-$4.0 billion) are projected by the market to record negative net cash, or net debt, due to expanded AI infrastructure investments.

The year-end net cash for rival memory chipmaker Micron is expected to reach $40.1 billion (approx. 57.2 trillion won).

Samsung Electronics and SK Hynix target returning half of their free cash flow (FCF), defined as cash generated from operating activities minus capital expenditures (CapEx), to shareholders.

In comparison, Micron promised a 100% return last June.

During its earnings conference call last week, SK Hynix only stated that it is reviewing measures to expand shareholder returns and will share its plans within the year.

Richard Clode, a portfolio manager at asset management firm Janus Henderson Investors, a shareholder of SK Hynix, noted that sticking to around 50 percent of free cash flow would result in an inefficient balance sheet, adding that he believes SK Hynix understands the market's urgency and confusion while urging the company to raise the payout ratio to at least 80 percent.

JPMorgan lowered its target price for SK Hynix on the 5th, stating that a clear stance on capital allocation is essential to restore stock market sentiment.

Adil Ebrahim, head of equities at Clay Group, remarked that given the expected cash-generation capabilities, both companies can afford their investments while providing significantly larger returns to shareholders, noting it is not an either-or choice between investment and shareholder returns.

Reuters previously reported that Samsung Electronics said in a statement sent to the outlet that it remains focused on maintaining a sound financial structure while also exploring ways to expand shareholder returns in a sustainable manner.

SK Hynix also stated in a separate statement that it believes it can expand shareholder returns to a meaningful level and is reviewing various options for additional returns.

(Photo: Yonhap News)