UBS strategist Sunil Tirumalai warns that return on invested capital is shifting from the U.S. to Asia as the global memory-chip cycle tightens. In a Monday note to clients, he highlighted that DRAM and NAND are expected to remain undersupplied until late 2027, creating a price surge that will lift profitability for Samsung and SK Hynix to unprecedented levels.

Tirumalai estimates that these two companies' free cash flow will represent over 4% of global corporate FCF in 2027 and approximately 14% of all emerging market FCF. He noted that their combined cash flow will surpass that of U.S. hyperscalers for several years, marking a significant redistribution of the ROIC profit pool. The strategist projects that the next three years of free cash flow for Samsung and SK Hynix will amount to 70-90% of their market capitalization.

UBS has upgraded Korea to Overweight, arguing that despite recent market gains, substantial value remains. The bank's Korea team is now 40% above consensus on MSCI Korea 2027E EPS. However, Tirumalai cautioned that the call depends on sustained high AI capital expenditure and that Korea remains one of the more exposed emerging-market regions to U.S. tariffs.