Shinhan Asset Management Lists Two SOL Semiconductor Front- and Back-End Process ETFs

Shinhan Asset Management is launching two new semiconductor exchange-traded funds (ETFs) that allow investment in domestic semiconductor companies segmented by process stages.

Launching on the 14th, the ‘SOL Semiconductor Front-end Process’ and ‘SOL Semiconductor Back-end Process’ ETFs feature portfolios condensed into 10 stocks, focusing exclusively on key companies in the domestic semiconductor front-end and back-end processes.

Kim Jeong-hyun, Head of the ETF Business Division at Shinhan Asset Management, said, “These SOL Semiconductor Front-end Process and SOL Semiconductor Back-end Process ETFs can be considered specialized semiconductor ETFs. Depending on the perspective on the semiconductor industry, investors can separately invest in front-end core companies benefiting from the upturn in the semiconductor cycle and utilization rate recovery, and back-end core companies related to HBM (High Bandwidth Memory), advanced packaging, and on-device AI, which are gaining attention due to the massive expansion of front-end demand driven by artificial intelligence (AI).” He added, “They are suitable for investors seeking more agile investment strategies.”

The semiconductor front-end process refers to the series of steps that produce semiconductor chips by drawing circuits on wafers, while the back-end process involves packaging and testing after wafer manufacturing.

The SOL Semiconductor Front-end Process ETF is linked to the key semiconductor investment themes of 2024: utilization rate recovery and the perennial challenge of miniaturization in the semiconductor industry. Due to unprecedented semiconductor production cuts in 2023, supply has decreased, leading to price increases starting with DRAM. As demand recovers and prices rise simultaneously, utilization rates are expected to recover significantly, benefiting front-end companies. Additionally, domestic leading companies investing in miniaturization technologies, including EUV (Extreme Ultra Violet) processes, are expected to attract attention.

The SOL Semiconductor Back-end Process ETF can be explained by AI and HBM. While last year’s expectations for AI expansion drove the movements of back-end companies, 2024 is expected to see performance improvements driven by surging AI demand determine their movements. Although some valuation pressure exists due to last year’s stock price increases of related companies, upward revisions in earnings are alleviating this burden. Hanmi Semiconductor, the leading HBM stock, is a representative example, having recorded a Q4 earnings surprise last year and breaking out of its trading range to reach new highs.

Kim said, “AI is a market that has just begun to bloom. Looking back at how the stock prices of actual beneficiary companies performed during the introduction of PCs and smartphones, it is clear that this is not a one-time event but a long-term growth theme that should be continuously monitored. The SOL Semiconductor Back-end Process ETF is expected to meet investors’ needs for investing in core AI semiconductor companies through its condensed portfolio.”

The ‘SOL Semiconductor Front-end Process ETF’ consists of 10 stocks including HPSP (21.6%), Hansol Chemical (15.2%), Dongjin Semichem (11.7%), Soulbrain (10.5%), and Jusung Engineering (9.6%). The ‘SOL Semiconductor Back-end Process ETF’ includes 10 stocks such as Hanmi Semiconductor (25.7%), Lino Industrial (16.8%), EO Technics (12.7%), Isu Petasys (12%), and Hana Micron (7.7%).

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