Three 'SOL Semiconductor Materials, Parts and Equipment' ETFs See KRW 223.1 Billion in Retail Investor Net Buying Over Past Month

Improving memory market conditions and expanding HBM supply contracts
Growing expectations for earnings improvements at semiconductor materials, parts and equipment companies

Shinhan Asset Management said on October 14 that individual investors’ net purchases of three exchange-traded funds (ETFs) investing in domestic semiconductor materials, parts and equipment companies totaled KRW 223.1 billion over the past month.

According to the Korea Exchange on October 13, the net assets of the SOL AI Semiconductor Materials, Parts and Equipment ETF stood at KRW 1.3569 trillion, while those of the SOL Semiconductor Front-End Process ETF and the SOL Semiconductor Back-End Process ETF stood at KRW 465.2 billion and KRW 172 billion, respectively. Since the start of the year, net assets have increased by KRW 892.3 billion for the SOL AI Semiconductor Materials, Parts and Equipment ETF, KRW 429 billion for the SOL Semiconductor Front-End Process ETF and KRW 147.8 billion for the SOL Semiconductor Back-End Process ETF, bringing the total increase across the three products to KRW 1.4691 trillion.

Even amid a correction in the semiconductor market and heightened volatility in the second half of the year, the net assets of the three products increased by KRW 116.1 billion, KRW 192.7 billion and KRW 88.6 billion, respectively. Expectations for medium- to long-term earnings growth at semiconductor materials, parts and equipment companies, driven by improving memory market conditions and increased investment in high-bandwidth memory (HBM), are believed to be translating into investment demand.

“Expectations for improving global memory market conditions and increased investment in HBM are drawing individual investors’ attention to semiconductor materials, parts and equipment ETFs,” said Kim Jeong-hyun, head of Shinhan Asset Management’s ETF Business Group. “Despite short-term volatility in the semiconductor sector, investment demand focused on the medium- to long-term growth prospects of major materials, parts and equipment companies continues to flow in.”

Major securities firms expect rising capital investment in both memory and non-memory sectors from this year through 2028 to create a favorable order environment for semiconductor materials, parts and equipment companies overall. Demand for related equipment is also expected to be supported not only by memory makers’ capacity expansions and process upgrades, but also by increased capital investment by TSMC and greater investment by global outsourced semiconductor assembly and test (OSAT) companies.

In front-end processes, key variables include new capacity additions by memory makers and whether they resume NAND investment. In back-end processes, rising demand for packaging and testing as HBM4 production scales up, along with advances in advanced packaging technology, could provide additional growth drivers. As increased semiconductor capital investment leads to equipment orders and then demand for materials and parts, while also extending into advanced packaging and testing processes, expectations for earnings improvements among related companies are growing.

“The scale of next year’s capital investment and plans for additional capacity expansions that Samsung Electronics and SK hynix will present in their third-quarter earnings announcements will be important variables,” Kim said. “If new supply contracts and expanded investment take shape, expectations for earnings improvements at semiconductor materials, parts and equipment companies could rise further.”

He added, “SOL ETFs offer both products that provide diversified exposure to the materials, parts and equipment industry as a whole and products focused on front-end or back-end processes, allowing investors to choose a strategy based on the growth drivers that interest them and their investment objectives.”

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