Beyond SK Hynix & Samsung: Why xETFs is Adding Exposure to South Korean Tech

**SPEAKER_1** (0:00)
Welcome back, we are on the watchlist. It's time, San Banas, Infant Nicole Pettel, ladies. It's time now for the ETF watchlist. So joining me now is Johnny Wu, founder, CEO, XETF. Johnny, it's nice to see you again. You and I only spoke a couple of days ago, and we did speak about how you're helping people get exposure to Korea AI Semiconductors by obviously offering this product KSMH. So as you and I had spoken about it the other day, just refresh our viewers' minds exactly what that is and why you're offering this product.

**Johnny Wu** (0:32)
Yeah, very simply. Well, first of all, Sam, thank you for having me back on the show. I do appreciate it.
If I take a step back, one of the biggest investments being made in society today is the AI infrastructure build out. So since Jachi BT has been released, and since agentic AI has become a driving force, there's been so much spending by the hyperscalers in building out AI data centers. And getting exposure to the picks and shovels, to the companies that are producing products that are critical to that, has been rewarded handsomely, right? So semiconductors specifically, right? And then if you think about some of the countries that dominate in semiconductors, namely memory, it is South Korea, and that's been one of the better performing stock markets in the past year. And if you combine those two, the theme of semiconductors and getting exposure to South Korea as one of the strongest players and the most dominant players in memory, what we thought was combining those two themes to giving investors the ability to have very targeted exposure to Korea AI semiconductors is the reason why we launched the ETF.

**SPEAKER_1** (1:52)
But it's not just all Samsung and SK Hynix, is it, though, Johnny?

**Johnny Wu** (1:56)
Yeah, that's right. Obviously, the SK Hynix and Samsung are the two largest global players in HBM, and then there's only a third player in Micron here in the US. But beyond getting exposure to the two largest companies that produce the HBM, they actually have to buy products, the testing equipment, substrates, and there's an entire value chain, supply value chain behind that. A lot of those companies that they have to buy from are based in South Korea.
I would argue that an investor that wants exposure to HBM, memory in South Korea, it's way beyond just those two largest companies.

**SPEAKER_1** (2:40)
Something I've been dying to ask you since I last spoke to you, but I didn't get a chance and I'm going to ask it now, is what happened post Nvidia's earnings? Something I noticed was this obvious divergence between how the South Korean and the Japanese memory players performed versus the US counterparts here, your Micron, your Sandisk, your Western Digital, for instance. Why such a different reaction in Asia versus US as far as that so-called Nvidia effect? I mean, is this because it's telling us about who controls the HBM supply right now, because of who Nvidia is looking to secure this stuff from, as to why South Korean and maybe the Kyoksies of the world over in Japan might actually perform better or I guess benefit from this relationship a little bit more?

**Johnny Wu** (3:31)
Sam, the one thing that I'm not very good at is predicting short-term market moves, right? But clearly, with Nvidia growing their AI data center revenue significantly, they see around the corners and they can see all the trends in the marketplace.
You will have times when memory providers in South Korea versus the NAND providers in Japan will outperform one over the other. I do think this is still early days, right? If you look at just simply the components that we're used to, whether you're buying an Apple iPhone or a computer, the cost of those have gone up so much because memory is so valuable, and the larger memory makers are shifting their production to service AI data centers, and that takes away from the supply that's available, and that's why it's driven up the price. So we're all feeling it in the market today.

**SPEAKER_1** (4:34)
If Nvidia is the closest thing that we have to a crystal ball, then Johnny, I'm wondering what you made of this acquisition of Hugging Face today. I mean, I don't know if you've dug into the specifics or the details, but just as far as the strategic move by Nvidia that now this is a new layer for the company at a time when it's now having to compete with all these hyperscalers and tech companies that had been buying its chips. Now they're doing their own thing. And also how Nvidia has now directly put itself into competition with China, with all these AI tigers, because I was having a fascinating chat yesterday with someone who said 80 percent of US startups are using Chinese open-source models. Eighty percent. That was a huge surprise to me.