Semiconductor Investing Gets More Selective as HBM, CPU and NAND ‘Pinpoint’ ETFs Flood the Market

The proliferation of highly specialized semiconductor ETFs in South Korea points to a maturing investment landscape for the sector, driven by AI's impact. Asset managers like Hanwha and Samsung are segmenting offerings to target specific components such as HBM and NAND, reflecting the increasing divergence in performance drivers across memory, CPUs, and GPUs. This specialization offers investors more granular exposure to key areas like HBM, where Korean giants SK hynix and Samsung Electronics hold a combined 79% global market share. However, the effectiveness of these new products is a key watchpoint. Despite targeting different themes, some specialized ETFs, such as the "RISE Global AI NAND Memory Semiconductor" and "PLUS Global HBM Semiconductor" ETFs, show significant overlap in their top holdings, with companies like Samsung Electronics and SK hynix appearing prominently in both. This raises questions about how much true differentiation these funds can achieve and whether they can deliver distinct returns, especially given the recent 11% decline in the Philadelphia Semiconductor Index over the past three months. For Korean investors, the challenge lies in constructing portfolios that genuinely reflect targeted themes, particularly when relying heavily on domestic stocks. Given Korea's strong weighting towards memory chipmakers, a strategy incorporating global stocks may be necessary to gain exposure to other critical segments like CPUs, as noted by Lee Sun-yup of AFW Partners.