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Top AI Semiconductor ETFs Deliver Up to 27% YTD Returns Amid Global Industry Surge
The global AI semiconductor industry continues to surge forward, overcoming concerns around overinvestment and capitalizing on its technological advancements. In South Korea, exchange-traded funds (ETFs) with significant exposure to this sector have demonstrated remarkable performance, largely driven by SK Hynix [000660]. These ETFs are positioning investors to benefit from the AI-driven semiconductor boom, despite volatility stemming from high-bandwidth memory (HBM) market concerns.
Leading AI Semiconductor ETFs in 2023
As of July 23, leading AI semiconductor ETFs in South Korea are offering noteworthy returns in 2023. Among them, Hanwha Asset Management's PLUS Global HBM Semiconductor stands out with an impressive year-to-date (YTD) return of 26.60%, fueled by SK Hynix's significant allocation of 28.3% within the fund.
Other ETFs closely linked to SK Hynix have also delivered notable returns:
- ACE Global Semiconductor TOP4 Plus SOLACTIVE (Korea Investment Management): 17.9% YTD return | SK Hynix allocation: 21.86%
- SOL Korean Global Semiconductor Active (Shinhan Asset Management): 12.35% YTD return | SK Hynix allocation: 7.99%
- KODEX Asia AI Semiconductor ex-China Active (Samsung Asset Management): 12.22% YTD return | SK Hynix exposure: 9%
SK Hynix’s Impact on the AI Semiconductor Industry
SK Hynix has emerged as a pivotal player in the industry, producing advanced HBM (high-bandwidth memory) chips essential for AI computations. The company's performance reflects its dominance; its share price surged 67.9% in the first half of 2023 alone.
However, challenges persist for SK Hynix. On July 17, Goldman Sachs downgraded its rating from "Buy" to "Neutral," citing anticipated declines in HBM pricing next year. This triggered a market retreat in SK Hynix’s stock value. Additionally, retail investors in South Korea have engaged heavily in debt-financed buying, intensifying volatility in the near term.
Ryu Young-ho, a researcher at NH Investment & Securities, clarified, "Despite current noise surrounding SK Hynix’s stock, the company’s leadership in AI technology and cost-competitive HBM production positions it strategically within this expanding sector. However, price fluctuations are expected until 2024, when clarity over HBM supply volumes emerges."
Diversification Strategies: The Nvidia-SK Hynix Synergy
To stabilize returns in the AI semiconductor market, experts recommend diversification strategies incorporating both SK Hynix and Nvidia, the global leader in AI computation chip manufacturing. SK Hynix supplies its HBM products to Nvidia, creating a partnership often likened to a "flagship and escort ship," ensuring synchronized progress in innovation.
ETFs with Nvidia exposure have shown resilience:
- ACE Global Semiconductor TOP4 Plus: 18.36% 1-year return
- SOL Korean Global Semiconductor Active: 6.96% 1-year return
This synergy between Nvidia and SK Hynix underscores the complementary strengths of these industry leaders and mitigates uncertainties in the semiconductor space.
AI Semiconductor Market Outlook
Optimism surrounds the long-term prospects of the AI semiconductor industry. A recent market milestone saw Nvidia’s market capitalization surpass $4 trillion, dispelling apprehensions regarding an AI investment bubble. Meanwhile, potential developments including reductions in export restrictions on AI semiconductors to China and rapid innovation in AI technologies could further act as catalysts for growth.
A representative from the financial investment industry emphasized, “Maintaining a diversified portfolio and adopting a long-term investment strategy is critical for capitalizing on sustained growth opportunities in the AI semiconductor sector.”
AI Semiconductor ETF Performance Overview
The following table provides a detailed performance summary of South Korea's leading AI semiconductor ETFs, showcasing their net assets, allocations to Nvidia and SK Hynix, and their YTD and 1-year returns.
| ETF Name | Asset Manager | Net Assets (KRW million) | Nvidia (%) | SK Hynix (%) | YTD Returns (%) | 1-Year Returns (%) |
|---|---|---|---|---|---|---|
| PLUS Global HBM Semiconductor | Hanwha | 7,223 | - | 28.30% | 26.60% | -2.92% |
| ACE Global Semiconductor TOP4 Plus | Korea Investment | 335,765 | 21.75% | 21.86% | 17.89% | 18.36% |
| SOL Korean Global Semiconductor Active | Shinhan | 54,943 | 9.56% | 7.99% | 12.35% | 6.96% |
| KODEX Asia AI Semiconductor ex-China | Samsung | 9,346 | - | 9.00% | 12.22% | -4.39% |
| KIWOOM Global AI Semiconductor | Kiwoom | 21,807 | 22.47% | - | 12.07% | 17.64% |
| TIGER Japan Semiconductor FACTSET | Mirae Asset | 17,106 | - | - | 11.02% | -8.48% |
| TIGER US AI Semiconductor Fabless | Mirae Asset | 18,840 | 24.90% | - | 10.11% | - |
| KODEX US Semiconductor | Samsung | 485,383 | 21.75% | - | 9.93% | 12.75% |
| RISE US Semiconductor NYSE (H) | KB Asset Management | 34,709 | 8.56% | - | 9.84% | -2.82% |
| TIGER US Philadelphia AI Semiconductor Nasdaq | Mirae Asset | 474,297 | 21.01% | - | 8.87% | - |
(Data Source: Koscom ETF Checker)
Conclusion: Capitalizing on AI Semiconductor Growth
The AI semiconductor sector offers a fertile ground for investors, particularly through ETFs optimized for leading players like SK Hynix and Nvidia. Despite ongoing volatility regarding HBM production and pricing, industry trends remain robust. Diversification and a long-term investment perspective are essential strategies for navigating this dynamic market and securing sustainable returns.
By investing in AI-powered ETFs supported by innovative semiconductor technologies, investors can ride the wave of growth driven by transformative advancements in artificial intelligence.
