To The Moon

Recently, shares of Samsung Electronics and SK Hynix have rallied aggressively. Samsung jumped 7.4% on the first trading day after the new year and then another 8% on Monday, leaving investors in awe.

As underlying equities soared, related ETFs also went into overdrive. Most notably, $南方两倍做多三星电子(07747)$ surged 32% over two trading days, while $南方两倍做多海力士(07709)$ gained 15% over the same period.

Driven by Samsung and SK Hynix, $韩国ETF-iShares MSCI(EWY)$ broadly lifted off, delivering year-to-date gains exceeding 7.8%, significantly outperforming both the $标普500(.SPX)$ and the $纳斯达克100指数(NDX)$

On the news front, Jun Young-hyun, Co-CEO of Samsung Electronics, struck an optimistic tone in his New Year address last week. In his message, he stated: “Our HBM4 has demonstrated differentiated competitiveness—it even prompted customers to comment: ‘Samsung is back.’” These remarks have reignited market expectations that Samsung may soon secure a supply agreement with NVDA.

HBM4 is strategically critical to Samsung. In the traditional DRAM (Dynamic Random Access Memory) segment, Samsung has long been the undisputed market leader. However, due to strategic missteps and short-termism, the company missed the HBM3 opportunity during the AI upcycle, allowing SK Hynix to overtake it, while Micron aggressively closed the gap.

HBM4 represents the next-generation upgrade to HBM3. As AI GPU performance continues to scale, memory requirements—particularly bandwidth—have risen sharply, rendering conventional DRAM insufficient. High Bandwidth Memory (HBM) has therefore become indispensable. Currently, NVIDIA’s Blackwell architecture utilizes HBM3E, while the next-generation Rubin architecture is expected to fully adopt HBM4!

During the HBM3 cycle, Samsung lagged behind peers, failing to secure NVIDIA certification until September of last year. Consequently, if Samsung can be the first to achieve mass production of HBM4, it stands a strong chance of reclaiming industry leadership.

In the memory sector, Samsung, SK Hynix, and Micron collectively control roughly 90% of global market share. Using the Herfindahl–Hirschman Index (HHI) as a measure of market concentration, DRAM registers an HHI of 3,148, surpassing the 2,500 threshold indicative of oligopoly:

Against the backdrop of an oligopolistic memory market, explosive AI-driven demand has resulted in severe supply shortages, triggering an aggressive price upcycle. Yesterday, according to Korea Economic Daily, citing anonymous industry sources, Samsung Electronics and SK Hynix plan to raise server DRAM prices by 60%–70% in Q1 2026 compared with Q4 2025.

Despite the sharp rally in Samsung and SK Hynix shares, neither company is listed in the U.S. equity market, limiting direct access for U.S.-based investors.

Interested investors may instead consider ETFs. In the Hong Kong market, examples include the 2x Leveraged Long Samsung Electronics ETF (7747) and the 2x Leveraged Long SK Hynix ETF (7709).

It should be noted that these are leveraged ETFs, characterized by high volatility, daily rebalancing drag, and elevated management fees. As such, they are unsuitable for long-term holding by retail investors and are better suited to short-term tactical trading.

Value-oriented investors may prefer to focus on broad Korean equity ETFs. While these funds track a diversified basket of Korean companies, more than 45% of their holdings are concentrated in Samsung Electronics and SK Hynix:

Crucially, the Korean equity market has delivered a compound return exceeding 8.5% over the past 45 years. Even if the AI cycle were to cool in the future, Korea-focused ETFs can offer meaningful risk diversification.

For instance, Hyundai Motor, the fourth-largest holding in a major Korea ETF, hit a new all-time high in its share price today!