The artificial intelligence industry is only now entering its full growth phase despite the recent plunge in semiconductor shares, a fund manager said. But with the pace of earnings upgrades slowing at Samsung Electronics and SK hynix, investors need to broaden their exposure to chip materials, components and equipment makers, he said.
Choi Chi-hyun, deputy head of the second equity management division at NH-Amundi Asset Management, said on the 19th that the firm would move part of its holdings in Samsung Electronics and SK hynix into suppliers. He spoke at a press briefing marking the first anniversary of the Growth-Leading Korea Fund. Earnings estimates for the two chipmakers have stalled for two consecutive months, while investment in front-end chipmaking equipment is expected to increase next year, prompting the manager to seek additional returns from related companies. The fund will also maintain a high weighting in substrate makers, which stand to benefit as chip packaging grows larger and more layered.
Launched on Oct. 14 last year, the Growth-Leading Korea Fund invests in companies driving transformations in AI, clean energy and capital markets. Its return since inception stood at 84.86% as of Oct. 14, outpacing the KOSPI's gain by 17.23 percentage points. About 80% of that excess performance came from the semiconductor and IT hardware sectors.
"I don't think this is the stage to reduce our focus on AI," Choi said. "We will manage portfolio volatility through the financial and energy sectors." The fund has added insurers, which are expected to post better underwriting results and expand shareholder returns, as well as refiners and gas companies as an inflation hedge. Choi also pointed to the potential for improved earnings at battery makers as the U.S. energy storage system market expands.
NH-Amundi also offered an upbeat outlook on the chip cycle and the domestic stock market, citing growing AI demand and shareholder returns. Park Jin-ho, head of equity management at NH-Amundi, attributed the recent weakness in memory stocks to a combination of funding pressure at customers, intensifying competition and profit-taking, but said memory demand would rise as AI agents spread. "Even if the initial public offerings of OpenAI or Anthropic don't go well, that is not the end of AI," he said. "New leaders can emerge with new business models."
Park stressed that confidence in the durability of chip earnings and in shareholder returns is key to a revaluation of Korean equities. "Combined shareholder returns at Samsung Electronics and SK hynix could reach about 300 trillion won next year," he said. "If Samsung Electronics shows it is keeping its shareholder return commitments, a revaluation is possible."