The cash reserves of Samsung Electronics Co. exceeded 100 trillion won (US$88.53 billion) last year for the first time since its foundation thanks to the “super boom” in the global memory semiconductor market. Analysts are speculating that the company may pursue an aggressive merger and acquisition (M&A) strategy in order to become the number one in the system semiconductor market in 2030.
The amount of Samsung Electronics’ consolidated cash reserves came to 104.21 trillion won (US$92.26 billion) as of the end of last year, according to investment banking (IB) industry and business community sources on Feb. 17. The figure showed a whopping 24.7 percent growth from 83.60 trillion won (US$74.02 billion) a year earlier, surpassing the 100 trillion won (US$88.53 billion) mark for the first time. Cash reserves include a company’s cash, cashable assets, short-term finance products and long-term time deposits.
Samsung Electronics’ cash reserves account for nearly 38 percent of its total market cap of 274.90 trillion won (US$243.38 billion) as of Feb. 15. This is twice as high as the 53.70 trillion won (US$47.54 billion) market cap of SK Hynix Inc., which ranks second, and four times higher than Hyundai Motor Co.’s market cap of 25.80 trillion won (US$22.84 billion).
With a raid rise in cash holdings last year, Samsung Electronics’ total assets grew by as much as 12.5 percent in a year to 339.36 trillion won (US$300.45 billion) as of the end of the year, hitting an all-time high. The amount of net cash reserves, which subtracts cash from debt, also stood at 89.55 trillion won (US$79.28 billion).
The reduction in facility investment from 43.40 trillion won (US$38.42 billion) in 2917 to 29.40 trillion won (US$26.03 billion) last year also contributed to the increase in cash reserves.
Since the company secured the highest-ever cash reserves, the amount of dividend payout surged by 49.9 percent on-year to 10.19 trillion won (US$9.02 billion) last year, surpassing the 10 trillion won (US$8.85 billion) mark for the first time. However, the amount of treasury stock acquisitions dramatically dropped from 8.35 trillion won (US$7.39 billion) in 2017 to 880 billion won (US$779.11 million).
There is a rumor in the market that Samsung Electronics will take over global leading semiconductor companies based on surplus cash. Kiwoom Securities Co. recently released its investment strategy report and said, “Samsung Electronics is considering acquisition of NXP, Xilinx and Infineon, according to recent media reports.” An industry insider said, “As vice chairman Lee Jae-yong recently declared to become No. 1 in the non-memory semiconductor sector by 2030, the company is highly likely to pursue an aggressive M&A strategy.”