South Korean retail investors are responding to one of the sharpest pullbacks in the country’s semiconductor sector this year by increasing, rather than reducing, their exposure.
Shares of Samsung Electronics, South Korea’s largest technology company and one of the world’s leading memory chip manufacturers, and SK Hynix, South Korea’s second-largest memory chipmaker and a key supplier of high-bandwidth memory used in artificial intelligence servers, have fallen sharply this month. Instead of retreating, investors have poured billions of dollars into leveraged exchange-traded funds tied to the two companies, signaling continued confidence that the recent decline reflects short-term market volatility rather than weakening demand for AI infrastructure.
According to the Korea Exchange, 14 leveraged ETFs linked to Samsung Electronics and SK Hynix accounted for 27.6% of all ETF trading in South Korea between the beginning of the month and July 7. Although those funds represent only about 1.2% of the country’s 1,144 listed ETFs, they generated more than one-quarter of total ETF trading activity.
The buying accelerated even as the underlying shares declined. Samsung Electronics lost 11.38% during the period, while SK Hynix fell 16.94%. Despite the selloff, leveraged semiconductor ETFs increased their share of overall ETF trading from 26.6% in the previous month.
Investor demand was overwhelmingly concentrated on purchases. Data compiled by South Korean financial information provider FnGuide showed that a net $1.7 billion flowed into the 14 single-stock leveraged ETFs tracking Samsung Electronics and SK Hynix between July 1 and July 7.
The largest inflow went to the KODEX SK Hynix Single Stock Leveraged ETF with $817 million, followed by the TIGER SK Hynix Single Stock Leveraged ETF at $333 million. The KODEX Samsung Electronics Single Stock Leveraged ETF attracted $317 million, while the TIGER Samsung Electronics Single Stock Leveraged ETF received $234 million.
Single-stock leveraged ETFs seek to deliver twice the daily return of an underlying stock. While they can amplify gains during rallies, they also magnify losses during declines. In volatile markets, repeated price swings can reduce returns through negative compounding, meaning investors can lose value even if the underlying stock later returns to a similar price.
The aggressive buying suggests many South Korean investors continue to view Samsung Electronics and SK Hynix as long-term beneficiaries of the global expansion in artificial intelligence computing. Both companies occupy critical positions in the global memory chip supply chain, making them closely tied to future spending on AI data centers and computing infrastructure.
At the same time, uncertainty surrounding semiconductor valuations, geopolitical tensions, supply-chain risks and the outlook for global monetary policy continues to fuel market volatility. Those factors could keep semiconductor shares under pressure in the near term even if industry demand remains healthy.
For now, South Korea’s retail investors appear to be treating the recent correction as an opportunity rather than a warning. Their willingness to increase leveraged exposure despite double-digit declines reflects continued confidence that the AI-driven semiconductor cycle has not yet run its course—a view that will ultimately be tested by the next phase of the global AI investment boom.
