Investment in 'Pure-Play' Semiconductors... Launch of Three PLUS ETF Solutions

Focus on Memory, Value Chain Expansion, and Active MCE

Pure-Play-Centric, Excluding Diversified Non-Semiconductor Operations

Hanwha Asset Management announced on the 23rd that it is proposing three PLUS Exchange Traded Funds (ETFs) that invest in pure-play semiconductor companies.

The three products are the PLUS Global HBM Semiconductor ETF, PLUS Korea HBM Semiconductor ETF, and PLUS AI Semiconductor Materials, Components & Equipment Active ETF. Each product is composed mainly of companies with high proportions of semiconductor sales, allowing investors to select based on their individual objectives.

All three products commonly focus on including companies where semiconductor revenue constitutes the core of their overall performance. Businesses like Samsung Electro-Mechanics (which specializes in MLCCs and camera modules) and SK Square (a holding company with non-semiconductor subsidiaries like 11st and SK Shieldus) are excluded from all three ETFs, despite being often classified as semiconductor-related stocks, because a significant share of their revenue comes from non-semiconductor businesses. This exclusion is due to the risk that, when the semiconductor industry recovers, the performance of other business units may drag down the overall returns.

Geum Jeongseop, Head of the ETF Division at Hanwha Asset Management, stated, “Many semiconductor-themed products include stocks with significant non-semiconductor operations, which can dilute the impact of industry upswings. The PLUS Semiconductor Series of three ETFs has focused portfolios built around companies with high proportions of semiconductor revenue, enabling changes in the business climate to be reflected directly in investment performance.”

The PLUS Global HBM Semiconductor ETF, listed in September 2022, allocates about 80% of its portfolio to the three major memory companies — Samsung Electronics, SK hynix, and Micron Technology — as well as SanDisk. The remaining portion is invested in core front-end equipment stocks like Applied Materials and Lam Research, and in back-end equipment stocks such as Teradyne and Hanmi Semiconductor. Key front-end processes (etching and deposition) and back-end processes (testing and packaging) are represented by a small set of core stocks.

As of September 18, the ETF’s returns by period are as follows: 51.1% over the past 6 months, 292.4% over 1 year, 674.0% over 3 years, and 947.8% since listing. Total net assets amount to 1.6776 trillion won.

The PLUS Korea HBM Semiconductor ETF invests 50% in Samsung Electronics and SK hynix and the remaining 50% in eight domestic companies specializing in materials, components, and equipment for semiconductors (with 31.25% in front-end equipment and 18.75% in back-end substrates). The ETF aims to benefit from investing in Korea’s two leading memory companies as well as in MCE (materials, components, and equipment) firms expected to gain from AI (artificial intelligence) memory-related capital expenditures that stimulate demand for MCE products.

For MCE holdings, the ETF mainly includes core front-end equipment makers (PSK, Vm, TES, Wonik IPS, Jusung Engineering) and back-end substrate companies (Simmtech, ISU Petasys, and Daeduck Electronics).

The PLUS AI Semiconductor Materials, Components & Equipment Active ETF is an actively managed product that invests 100% in domestic MCE companies. Its primary holdings include SFA Semiconductor, Intechplus, Doosan, ISU Petasys, ISC, SamCNS, TES, DI, Hansol Chemical, and PSK Holdings.

By exclusively investing in MCE companies, this ETF is able to fully capture the flow in which increases in capital investment drive demand from equipment orders through to mass production. Active management allows fund managers to flexibly adjust allocations between front-end and back-end based on production phase assessments, letting investors target MCE-specific momentum while minimizing dilution.

Director Geum added, “We anticipate that the benefits of the semiconductor cycle will increasingly spread from major memory companies to MCE companies. In particular, the MCE industry is characterized by a large number of companies for each process, complex technologies, diverse client bases and contract structures, making direct access to individual stocks challenging. For this reason, actively managed ETFs that can instantaneously reflect analyst research in portfolio construction will be an effective investment vehicle.”

This content was produced with the assistance of AI translation services.