Samsung Asset Management Lists KODEX Asia Semiconductor Supply Chain exChina Active ETF

Focus on Korean Memory, Taiwanese Foundry, and Japanese Sobeojang: Chip4 and Policy Benefits

[Asia Economy Reporter Kwangho Lee] Samsung Asset Management announced on the 1st that it will list the 'KODEX Asia Semiconductor Supply Chain exChina Active ETF,' which invests in the semiconductor industries of three Asian countries: Korea, Taiwan, and Japan. This exchange-traded fund (ETF) focuses on investing in 30 leading semiconductor companies within Korea, Taiwan, and Japan, whose positions in the global semiconductor market have recently been strengthened.

Following the establishment of the U.S.-led semiconductor alliance 'CHIP4' last year, the global semiconductor supply chain has been reorganized around the four countries of the U.S., Korea, Taiwan, and Japan, bringing the Asian semiconductor market into the spotlight. CHIP4 countries plan to solidify cutting-edge semiconductor technology in the long term through expanded semiconductor workforce exchanges, technological cooperation in advanced semiconductor sectors, and strengthened supply chain collaboration. By integrating the top technologies in each field?Korea (memory semiconductors), Taiwan (foundry), and Japan (materials, components, and equipment)?a stable semiconductor manufacturing ecosystem can be realized, and with the addition of U.S. (design and equipment) technology, a powerful semiconductor supply chain is expected to be established.

In addition to benefiting from CHIP4, policy benefits related to the semiconductor industry are also anticipated in each country. Korea is temporarily increasing the tax credit rate for investment increments compared to the previous three years from 4% to 10%, and is considering applying additional tax credits separately for the semiconductor sector, which is a national strategic industry. In this case, large corporations can receive up to an 18% tax credit, and small and medium enterprises up to 26%. Taiwan plans to implement tax credit policies for research and development (R&D) and facility investments at historically high levels within the year. Japan supports 40% of TSMC's investment in building a factory in Japan and is allocating an additional 12 trillion won in supplementary budgets for next-generation semiconductor development.

The KODEX Asia Semiconductor Supply Chain exChina Active ETF uses the ‘iSelect Asia Semiconductor Manufacturing Alliance Index,’ which invests in semiconductor-related companies in Korea, Taiwan, and Japan, as its benchmark index. This index is a collaboration between Samsung Asset Management and iSelect, selecting core technologies and key themes related to Asian semiconductors and including the top 10 stocks from each country, totaling 30 stocks.

Alongside investing in the benchmark index, the ETF aims to generate additional returns through bottom-up research-based selective company investments. Major constituent stocks include Korea’s ▲Samsung Electronics ▲SK Hynix, Taiwan’s ▲TSMC ▲MediaTek, and Japan’s ▲Shin-Etsu Chemical ▲Tokyo Electron. The total expense ratio is 0.5% per annum.

Im Taehyuk, Executive Director of Samsung Asset Management’s ETF Operations Headquarters, stated, "The Asian semiconductor market is expected to benefit not only from the U.S. through the CHIP4 alliance but also from each country’s semiconductor industry-related policy benefits. Since the semiconductor market is widely expected to enter an upward cycle in the second half of this year, investing at this point is positive. This product allows flexible weighting adjustments for stocks benefiting from the cycle industry through active management with selective company investments beyond the index."

Meanwhile, with the listing of this Asia Semiconductor ETF, Samsung Asset Management now offers a total of five semiconductor ETF lineups. These include 'KODEX Semiconductor,' which invests in core domestic semiconductor industry stocks; 'KODEX U.S. Semiconductor MV,' which invests in leading global semiconductor companies in the U.S.; 'KODEX Fn System Semiconductor,' which invests in the system semiconductor industry, a key element of the Fourth Industrial Revolution; and 'KODEX Korea-China Semiconductor (Synthetic),' which invests in the semiconductor markets of Korea and China. Now, with KODEX ETFs alone, investors can invest in major semiconductor industry companies both domestically and internationally.