Why Korea? Semiconductors, Strategic Manufacturing and the KOSPI 200

South Korea’s two memory-chip leaders dominate its stock market. The rest of the index spans an industrial economy built around defence, shipbuilding, batteries, autos and advanced materials.

Source: Invest KOREA; Samsung Semiconductor; company materials. Selected clusters; locations are approximate. As at September 1, 2026.

The Global X Korea KOSPI 200 Index ETF (KORX) offers Canadian investors a way to invest in this story without trying to pick individual winners. The ETF is designed to track the KOSPI 200, which brings together 200 of the largest companies listed on the Korea Exchange.

Today’s portfolio is led by Samsung Electronics and SK hynix. It also includes banks, automakers, defence contractors, shipbuilders, battery makers, materials businesses and other companies tied to Korea’s economy.

Korea is easy to reduce to a semiconductor trade. Samsung Electronics and SK hynix dominate the local market, and their fortunes matter enormously to the KOSPI 200. Follow the country’s export data – or trace its industrial centres from Pyeongtaek to Ulsan – and a broader picture emerges. Korea is one of the few advanced economies able to manufacture memory chips, cars, batteries, LNG carriers and modern defence equipment at global scale.

That industrial depth has been built over decades. Korea has developed the engineers, supplier networks, ports and production lines needed to make complex products in large volumes. Merchandise exports reached a record US$709.7 billion in 2025. Semiconductors led the way, while automobiles and ships also set or approached record levels.

The KOSPI 200 holds 200 companies selected for their size, liquidity and representation of Korea’s major industries. It is free-float adjusted and weighted by market capitalization, so its largest companies carry far more influence than the rest.

As of September 2, 2026, information technology made up 68.6% of a publicly available KOSPI 200-tracking portfolio. Samsung Electronics and SK hynix alone represented 59.8%. There is no getting around that concentration: the index gives investors broad access to corporate Korea, but its near-term direction is still closely tied to memory pricing and global spending on AI infrastructure.

Source: RISE ETF, RISE 200 portfolio and sector data, September 2, 2026. The portfolio is used as a public proxy for the KOSPI 200; index and fund weights may differ.

Graphic processing units (GPUs) may get most of the attention, but AI systems are just as dependent on memory. High-bandwidth memory, or HBM, sits close to AI accelerators and moves data fast enough to keep them working efficiently. Dynamic random access memory (DRAM) supplies working memory, while NAND flash handles longer-term storage. As AI models grow and inference spreads, demand reaches across all three categories.

For investors, this is a different slice of the AI opportunity than they typically receive through U.S.-heavy technology portfolios. U.S. markets are well represented by chip designers, cloud platforms and software companies. Korea’s two largest companies sit in the physical supply chain, manufacturing the memory used by AI accelerators and data centres.

This position reflects years of investment. Samsung Electronics and SK hynix built the manufacturing scale and technical expertise that now place them at the centre of the AI supply chain. Together, they held 73% of the global DRAM market and 51% of NAND flash in 2022. By the third quarter of 2025, their combined HBM share had reached 88%, according to Counterpoint Research data reported by Reuters. Korean semiconductor exports rose 22.2% in 2025 to a record US$173.4 billion – nearly one-quarter of the country’s merchandise exports.

Source: U.S. International Trade Administration, based on TrendForce data for 2022; Reuters, based on Counterpoint Research data for Q3 2025.

Source: Korea Ministry of Trade, Industry and Resources, January 2, 2026. Selected categories; values do not sum to total exports.

Friendshoring is sometimes presented as though Western economies can simply swap out China. In practice, money and technology do not create factories, skilled workers or supplier networks overnight. Korea already has much of this capacity, along with engineering expertise, export experience and production systems that can work with allied-country supply chains.

Korea’s security environment gave it a reason to keep producing conventional military equipment even as many Western countries allowed their capacity to shrink after the Cold War. Today, Korean companies export K9 self-propelled howitzers, K2 tanks, FA-50 aircraft, missile systems and naval vessels. Hanwha Aerospace, Hyundai Rotem and Korea Aerospace Industries are among the KOSPI 200 companies tied to this business.

Defence export orders climbed from US$7.25 billion in 2021 to a record US$17.3 billion in 2022 and have remained well above the roughly US$3 billion annual range seen during much of the 2010s. The annual numbers will be uneven because a few large contracts can move the total dramatically. Poland shows why Korea’s existing capacity matters: the first 180 K2 tanks were delivered by November 2025, followed by a second order for another 180. That agreement combines near-term Korean production with 61 tanks to be assembled in Poland, supported by local maintenance infrastructure and technology transfer.

Source: Korea National Assembly Budget Office; Korea Defense Acquisition Program Administration; Yonhap News Agency. Annual contract/order values.

South Korea produced approximately 28% of global shipbuilding output by gross tonnage in 2024, second only to China. Korean yards are especially strong in more demanding vessels, including LNG carriers and ultra-large container ships. Hanwha Ocean and HD Hyundai give KOSPI 200 investors exposure to this ecosystem. As the United States and Europe confront limited shipbuilding capacity, Korean companies may also find opportunities in naval construction, maintenance and repair, shipyard investment and technology partnerships.

Source: UN Trade and Development, Review of Maritime Transport 2025.

Korea’s battery makers are under real pressure from Chinese competitors, and that should not be glossed over. LG Energy Solution, SK On and Samsung SDI supplied 36.3% of EV-battery usage outside China in 2025, but their combined share fell to 28.7% in the first four months of 2026. Even so, Korea remains home to one of the largest non-Chinese battery ecosystems. Their plants and joint ventures across North America and Europe give Korean companies a role as battery and energy-storage supply chains become more regional. Hyundai Motor, Kia, POSCO Holdings and LG Display extend the KOSPI 200’s reach into vehicles, steel and display panels as well.

Korean shares have long traded at lower valuations than many international peers. Investors often point to complex conglomerate structures, cross-shareholdings, inconsistent capital allocation and weak protections for minority shareholders. Korea’s Corporate Value-up Program, introduced in 2024, is an attempt to change that record by encouraging companies to publish plans for improving returns on equity, capital efficiency and shareholder payouts.

Participation has accelerated. By the end of August 2026, 756 listed companies had disclosed value-up plans, up from 92 at the end of 2024. The participating KOSPI companies represented 87.7% of main-board market capitalization. Amendments to Korea’s Commercial Act have also expanded directors’ duty of loyalty to shareholders and increased the required share of independent directors at listed companies.

Source: Korea Exchange, August 2026 monthly Corporate Value-up update; Seoul Economic Daily, September 3, 2026.

Japan offers a useful comparison, although not a blueprint. Its modern reform effort began with stewardship and governance codes in 2014 and 2015, followed by the Tokyo Stock Exchange’s 2023 request for companies to focus on cost of capital and share price. Over time, more Japanese companies increased dividends and buybacks, reduced cross-shareholdings and addressed underperforming assets. Korea is earlier in the process and its chaebol structures create distinct challenges. Disclosing a plan is a start; a lasting re-rating will require companies to change how they allocate capital and treat minority shareholders.

KORX reaches well beyond semiconductors, but its current weights still make it a concentrated, technology-sensitive allocation. This concentration and technology sensitivity are important risks to consider.

Korea is not a low-risk market. The KOSPI 200 can be moved sharply by Samsung Electronics and SK hynix, memory-chip prices and swings in semiconductor spending. Competition from China, trade restrictions and changes in global AI investment can affect several Korean industries at once. Investors also take on Korean-won currency exposure, single-country and foreign-market risk, corporate-governance concerns and the geopolitical risks of the Korean peninsula.

AI-related demand is one factor drawing attention to Korea’s economy. Its export-ready industrial capacity may matter for much longer, while reform could determine how much of that strength reaches shareholders. KORX provides focused exposure to Korea’s economy through a Canadian-listed ETF.

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Published September 22, 2026