After Samsung Electronics and SK Hynix announced that they would allocate over 50% of their free cash flow (FCF) for shareholder returns, SanDisk and Micron proposed to return 100% of excess cash to shareholders, raising concerns in the market about the relatively low level of shareholder returns from South Korean semiconductor companies. The South Korean industry and financial institutions pointed out that the cash metrics on which the two policies are based are defined differently, making a simple comparison of the 50% and 100% ratios unfair. Industry insiders believe that the return policies of South Korean companies based on FCF are more certain in terms of amount forecasting, execution standards, and transparency. FCF typically refers to the cash generated from a company's operating activities, remaining after capital expenditures, and can be objectively calculated through data such as cash flow statements. Samsung Electronics announced that 50% of the cumulative FCF from 2024 to 2026 will be used for shareholder returns; SK Hynix plans to allocate over 50% of the cumulative FCF for shareholder returns during the period from 2025 to 2027.
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