Korea’s semiconductor investment cycle could be far more durable than a typical memory boom, according to Kenneth Wong, CIO of xETFs, with the country’s chip giants planning a massive expansion that could also benefit the companies supplying the equipment, packaging and materials needed to build the next generation of AI chips.
"Memory has historically been very cyclical, but long-term customer agreements and SK Hynix’s (NASDAQ:SKHY) expectation that memory demand could exceed supply through 2030 suggest this period of elevated demand may be much more durable," Wong said.
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Korea’s Chip Buildout Goes Beyond Samsung, SK Hynix
The scale of planned investment is substantial. SK Hynix plans to roughly double wafer capacity over five years and has outlined ₩1,100 trillion (U.S.$797 billion) of long-term investment, while Samsung has announced roughly ₩2,030 trillion in semiconductor investments through 2040, according to figures cited by Wong.
That spending could create opportunities beyond Korea’s two memory giants. Wong said investors are increasingly looking at the "picks and shovels" behind the AI memory boom, including equipment, packaging, testing and materials companies.
"We are starting to see more interest in the picks and shovels behind the memory leaders," Wong said. "Similar to how the U.S. AI trade broadened beyond the largest chip companies into networking, power and infrastructure, investors are increasingly looking at Korea’s equipment, packaging, testing and materials companies as part of the same AI buildout."
Wong highlighted Hanmi Semiconductor, Jusung Engineering and Techwing — companies that provide specialized equipment used to manufacture, assemble and test advanced memory.
KSMH Targets The Broader AI Memory Ecosystem
The xETFs Korea Semiconductor ETF (NASDAQ:KSMH) provides exposure to that broader ecosystem, including semiconductor equipment, packaging, testing, substrates and materials companies alongside chipmakers.
"Samsung and SK Hynix make the memory, but they are only part of the ecosystem behind it," Wong said. "KSMH also provides exposure to the Korean companies supplying the equipment, packaging, testing, substrates and materials needed to manufacture those chips."
The strategy could give investors exposure to the capital-spending cycle that develops around Korea’s AI-memory leaders rather than concentrating solely on the companies manufacturing the chips.
China Remains The Key Risk
The longer-term thesis faces a significant China-related risk. Wong identified the pace at which Chinese memory maker CXMT is scaling as the biggest risk to Korean memory stocks, noting that the company has gained meaningful share in conventional DRAM and has reportedly moved into early HBM3E production.
The critical question: Can CXMT sustain its conventional DRAM presence while scaling into advanced HBM and narrowing the technology gap?
For KSMH, that leaves investors balancing two forces, a potentially durable AI-memory buildout in Korea and the possibility of intensifying Chinese competition in memory.
Photo: JyCando on Shutterstock
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