South Korea’s president Lee Jae Myung unveiled the country’s largest-ever budget on Monday, raising total spending by 12.8% to 820.9 trillion won (nearly $610.14 billion), with 21.3 trillion won earmarked for semiconductors, physical AI and AI data centers — nearly double the 2026 level. A separate 4.7 trillion won will fund a sovereign AI model targeting “world’s highest performance,” alongside training for 2,000 semiconductor design specialists and expanded AI education.
South Korea's increased investment commitment comes amid a surge in semiconductor exports, with October shipments jumping 93.7% year over year to a record $115.3 billion and cumulative exports surpassing $900 billion for the first time.
Considering the fact that South Korea’s Samsung Electronics and SK Hynix dominate the global memory chip supply chain, which is critical for AI accelerators, Seoul’s latest spending push stands to ripple across the entire global AI ecosystem, not just domestically.
For investors, South Korea’s pivotal role in the global AI infrastructure expansion and its record spending commitment could entice them to look for companies positioned to benefit from rising demand for memory, packaging and data center infrastructure. Exchange-traded funds (ETFs) offering exposure to these companies could provide a way to capitalize on these growth trends.
Before exploring these ETFs, it is important to examine South Korea’s growing AI momentum and assess how the latest investment commitment could boost the AI industry, with the chip market at the center of attention.
The Chip Rally That Made Seoul a Global AI Hub
South Korea’s semiconductor industry has been the engine behind the KOSPI’s meteoric rise, with the benchmark index surging past 8,000 points in May 2026 as AI-driven demand for high-bandwidth memory (HBM) reshaped the country’s equity market.
Samsung Electronics and SK hynix, two of the world’s three largest memory chipmakers, have been the primary accelerators and beneficiaries.
Samsung’s shares have climbed roughly 190% over a six-month period in May, while SK Hynix gained about 220% as orders for advanced memory used in AI data centers soared.
It is imperative to mention in this context that SK Hynix alone holds approximately 50% of the global HBM market, making it a critical supplier to AI accelerator ecosystems. The rally has been so pronounced that SK Hynix became the second South Korean company to top 1,500 trillion won in market value.
This concentration of memory leadership in a single country is precisely why Seoul’s budget decisions carry outsized weight for global AI infrastructure.
Benefits of the Budget Pledge and the Case for ETFs
The 21.3 trillion won allocation for 2027 spans semiconductors, physical AI, and AI data centers, while 2.1 trillion won goes toward electricity and water infrastructure for chip plants that require uninterrupted power.
The expected outcome from this spending target is not merely higher output but a deepening of South Korea’s moat across the entire value chain: memory, packaging, substrates, testing and equipment.
For investors, picking individual winners in this ecosystem is difficult because the beneficiary list extends well beyond Samsung and SK hynix into materials, components and infrastructure firms.
ETFs solve this by offering diversified, single-ticker access to the Korean AI semiconductor value chain, capturing both the memory leaders and the smaller suppliers that stand to benefit from the government’s spending push.
Beyond Korea-specific funds, ETFs holding semiconductor companies worldwide also stand to gain. Notably, global chip ETFs capture the accelerator demand that South Korea’s increased capex in data center and chip production would generate. For example, NVIDIA NVDA through GPU procurement for sovereign AI and hyperscaler buildouts, AMD via its government-level heterogeneous computing partnership, and Broadcom through custom AI chip and HBM collaboration with Samsung and SK Hynix.
ETFs Positioned for the Upside
Considering the aforementioned discussion, the following ETFs should benefit from South Korea’s latest capex pledge:
iShares MSCI South Korea ETF EWY
This fund, with net assets worth $22.40 billion, offers exposure to 76 companies in South Korea. SK Hynix (holding 23.76% of this fund’s assets), Samsung Electronics (23.02%) and SK Square (2.96%) hold the first three positions in this fund.
EWY charges 59 basis points (bps) in fees. It traded at a good volume of 14.82 million shares in the last trading session.
VanEck Semiconductor ETF SMH
This fund, with net assets worth $64.52 billion, offers exposure to 26 companies involved in semiconductor production and equipment. NVDA (20.19%), Taiwan Semiconductor (9.58%) and Texas Instruments (5.70%) hold the first three positions in this fund. SK Hynix holds the 10th position in this fund, carrying a 4.14% weight.
SMH charges 35 bps in fees. It traded at a good volume of 8.61 million shares in the last trading session.
xETFs Korea AI Semiconductor ETF KSMH
This fund, with net assets worth $1.39 million, includes 10 to 25 Korean companies powering the AI semiconductor value chain, including memory, logic, manufacturing and infrastructure. SK Hynix (22.35%), Samsung Electronics (20.49%) and Hanmi Semiconductor (7.73%) hold the first three positions in this fund.
KSMH charges 65 bps in fees. It traded at a volume of 0.001 million shares in the last trading session.
iShares Semiconductor ETF SOXX
This fund, with net assets worth $42.97 billion, includes 30 companies across the semiconductor value chain, including those driving innovation in AI and benefiting from capital investments in digital infrastructure. Advanced Micro Devices AMD (9.24%), NVDA (7.98%), Micron Technology MU (7.95%) and Broadcom AVGO (7.58%) hold the first four positions in this fund.
SOXX charges 33 bps in fees. It traded at a good volume of 10.78 million shares in the last trading session.
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NVIDIA Corporation (NVDA): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).