Five Investment Points of the Global X Asia Semiconductor ETF (3119)

The AI revolution is fundamentally reshaping the semiconductor industry. We explain why the Global X Asia Semiconductor ETF (3119) is ideally suited to this shift beyond 2026. Here’s a brief summary of the five key investment points presented:

1. Asian Semiconductors are more attractive than the US ones
2. Hynix and Samsung: absolute leader in AI Memory chip
3. TSMC and its ecosystem companies
4. China’s Semiconductor Rise
5. Diversification to offset geopolitical risk

1. Asian Semiconductors are more attractive than the US ones: “Entering an era of manufacturing beyond chip design”

While US fabless (chip design) companies focused on software innovation, Asian companies built physical barriers to entry through tens of billions in capital expenditures. The Asian region, which controls 75% of global semiconductor manufacturing capacity, is not just a beneficiary; it is the “infrastructure itself” of the AI industry to come. (Counterpoint Research, December 2025)

Particularly, as of 2026, the global investment landscape is shifting from the US-centric chip design (Fabless) theme to the Asia-centric hardware manufacturing theme.

The driving force behind the US semiconductor theme has been its overwhelming “design capabilities,” represented by NVIDIA. However, as of 2026, the design sector is entering a fiercely competitive landscape. This is because so-called “hyperscalers”—big tech companies like Google (TPU), Amazon (Trainium), Meta (MTIA), and Microsoft (Maia), burdened by NVIDIA’s monopoly and high prices—are rushing to invest in developing their own ASIC chips. Design is no longer the exclusive domain of a single company, and with the proliferation of alternative chips, pricing power among design firms is weakening, leading to a downward trend in margins.

On the other hand, the “manufacturing capability”—the ability to translate even the most complex and sophisticated codes into actual semiconductors—is a domain of exclusive scarcity, completely dominated by Asian companies. The exponentially increasing difficulty in yield management and billions of dollar in facility investment costs have effectively blocked the entry of latecomers.

The recent unprecedented delivery delays for NVIDIA’s next-generation AI accelerators, the Blackwell (B200/GB200) series, symbolize this shift in manufacturing power. The delay in its mass production by nine months, compared to the original plan, was not rooted in the design itself. The core of the delay was the exponential increase in the difficulty of high-end manufacturing processes, including the dire yield issues arising from TSMC’s next-generation packaging (CoWoS-L) process and the inability of SK Hynix and Samsung Electronics to meet the demand for HBM3e chips needed. Even NVIDIA, a chip design powerhouse, had to endure billions of dollar in backlog demand until its Asian manufacturing partners resolved the physical process challenges.

Ultimately, the key to semiconductor hegemony by 2026 lies not in flashy chip design blueprints, but in Asia’s overwhelming manufacturing capabilities.

2. Hynix and Samsung: absolute leaders in AI Memory chip

For AI servers to think like humans, they must process massive amounts of data in an instant. The only key to resolving this bottleneck is high-bandwidth memory (HBM). This ETF has exposure to approximately one-quarter of its weights to Korean memory giants, who effectively dominate the global HBM market, securing the most reliable source of profit in the AI era.

As of 2026, SK Hynix, NVIDIA’s most trusted partner, is maintaining a technological lead by establishing a mass production system for its next-generation 16-layer HBM4 products. With pre-orders already backlogged for over a year, the market is dominated by memory manufacturers. Meanwhile, Samsung Electronics has made a bold move with its Customized AI Semiconductor (ASIC) strategy. Beyond simply selling memory, it maximizes profitability by combining HBM with its foundry capabilities, which handle everything from design to manufacturing according to customer orders. As memory semiconductors transform from a “general-purpose product” to a “high-value-added, customized strategic asset,” the profit contribution of Korean stocks within the fund is expected to rise sharply.

3. TSMC and its ecosystem companies

Even the most advanced AI chip designs are useless without a manufacturer capable of implementing them. TSMC, one of this ETF’s top three holdings, accounts for over 70% of the world’s advanced semiconductor manufacturing. (Counterpoint Research, December 2025) TSMC is the undisputed leader in the global AI ecosystem. From NVIDIA’s accelerators to Apple’s processors, the world’s smartest chips will all utilize TSMC’s 2nm (N2) process line. The surge in demand for AI semiconductors is strengthening pricing power, contributing to the ETF’s robust fundamentals.

Furthermore, the companies that form the semiconductor ecosystem surrounding TSMC are expected to perform well. MediaTek is also participating in the design of Google’s next-generation AI chips, the TPU v5 and v6 series, and has been selected as the supplier of cutting-edge 3nm and 5nm SerDes IP for Google’s TPU production. While Google designs its own chips, it leverages MediaTek’s expertise in core communications technologies for data processing, which is expected to drive demand for custom chips from major technology companies in the future.

4. China’s Semiconductor Rise

Ironically, geopolitical restrictions have opened up tremendous opportunities for domestic Chinese semiconductor companies. China boasts a semiconductor market with an annual purchasing power of approximately $250 billion, driven by purely Chinese brands, excluding subcontracting orders from US companies like Apple.

This ETF captures this explosive growth through SMIC, a symbol of manufacturing independence, and Cambricon, often referred to as the “China Nvidia.” Cambricon is rapidly expanding its market share with its Siyuan series of proprietary AI accelerators, designed to replace Nvidia’s high-performance GPUs. As US export restrictions on China forced major Chinese technology companies to opt for domestically produced solutions over Nvidia chips, Cambricon has established itself as the standard for China’s AI infrastructure, achieving unprecedented growth.

Cambricon’s vision is being realized by SMIC, China’s largest foundry. SMIC is strengthening its dominance in mature process fields while simultaneously meeting the advanced processing demands of domestic fabless companies, pushing technological boundaries. Backed by support from Chinese brands that dominate the global market, such as Xiaomi and BYD, the collaboration between these two companies is creating a unique Chinese semiconductor revenue ecosystem distinct from the global supply chain.

5. Diversification to offset geopolitical risk

This ETF’s powerful investment strategy focuses on assigning unique roles to each Asian regions in a portfolio encompassing the entire semiconductor supply chain. Semiconductors are a broad value chain industry spanning design, etching, and packaging, and no single region can monopolize this sector. This ETF leverages each region’s unique strengths to further diversify the portfolio.

Hynix, Samsung, TSMC: These are key drivers that directly translate “AI demand,” the semiconductor industry’s largest growth driver, into performance. Korea’s memory competitiveness and TSMC’s market dominance are complementary. Every AI server sold generates manufacturing revenue in Taiwan and memory sales revenue in Korea, effectively absorbing the double trickle-down effect of growth.

The Chinese semiconductor industry is quite distinct from other markets. Even amidst global economic fluctuations, China’s commitment to semiconductor growth and domestic production remains steadfast, acting as an independent variable.

Japanese Semiconductor equipment and component: Tokyo Electron (high end equipment), Hitachi (etching and test), and Sony occupy (image sensor) irreplaceable positions at the backbone of the supply chain. Even if the US-China conflict escalates or yield issues arise at specific manufacturers, Japan’s high-precision lithography equipment, metrology systems, and key photoresists remain essential for cutting-edge chip production.

In fact, the correlation between stocks in different regions has been quite low over the past two years.