Global X Asia Semiconductor ETF (HKEX:3119) and the Asian Semiconductor Supply Chain Hegemony

Key Points

• Global X Asia Semiconductor ETF offers: 1. Unique Exposure: It bypasses the crowded software/design trade to focus on the tangible manufacturing base. 2. Strategic Diversification: It creates a portfolio counterbalance to US-heavy tech holdings (like QQQ or SMH). 3. Asymmetric Value: It trades at a deep discount (25x P/E) relative to its US peers

Table 1: Top 10 Holdings of Global X Asia Semiconductor ETF

Asia’s Semiconductor dominance

Historically, value accrued disproportionately to US chip designers (Intel, NVIDIA, Qualcomm). However, as transistor scaling approaches physical limits (2nm and beyond) and AI workloads demand massive parallel processing and high-bandwidth memory (HBM), value creation is shifting toward manufacturers with execution scale and process leadership.

Asia currently accounts for approximately 70% of global semiconductor manufacturing capacity, driven by not only labour cost advantages but by deep engineering specialisation. Taiwan dominates advanced nodes and 2.5D/3D packaging; South Korea leads memory (DRAM/NAND); Japan controls critical supply chain of photoresists and wafer-handling equipment; while China continues to expand mature-node capacity and domestic tool production. 

Figure 1: Geographical allocation of Global X Asia Semiconductor ETF

What is Global X Asia Semiconductor ETF 

Global X Asia Semiconductor ETF (HKEX: 3119) seeks to invest in 40 Asian leaders across Korea, Japan, China and Taiwan markets that are involved in the production and development of semiconductors, including companies active in industries such as integrated circuit design (fabless), manufacturing (foundry), semiconductor production equipment (SPE) and semiconductor materials.

HKEX:3119 tracks the FactSet Asia Semiconductor Index, a benchmark designed to exclude diversified tech conglomerates and focus on companies with pure-play semiconductor revenue streams.

It is a physically replicating fund listed on the Stock Exchange of Hong Kong (SEHK). It carries a total expense ratio (TER) of ~0.68% per annum.

Asian semiconductor outshone the US peers in 2025 

Figure 2: Global X Asia Semiconductor ETF 2025 performance compared to US peers

A bundle approach in Asia semiconductor landscape to justify the cost structure

Table 2: AUM and expense ratio compared to global semiconductor peers

Figure 3: Yearly return of Global X Asia Semiconductor ETF

Still a reasonable valuation for Asia semiconductors 

The most compelling argument for HKEX:3119 is valuation.

US semiconductor indices trade at P/E ratios exceeding 35x-50x, pricing in perfection assumptions and indefinite growth. In contrast, HKEX:3119 trades at roughly 25x earnings, reflecting geopolitical and cyclical discounts. 

As AI scales from experimentation to industrial deployment, scarcity is likely to shift from design to manufacturing capacity, particularly in physical infrastructure (HBM and Fabs), potentially narrowing this valuation gap even in a flat US tech environment.

Table 3: Comparative Analysis of Major Semiconductor ETFs

Risks to monitor

Assets Under Management (AUM) and Liquidity

As of early 2026, the fund's AUM stands at approximately HKD 100-109 million. HKEX:3119 is less liquid than large US peers. 

While market makers provides continuous pricing, wider bid-ask spreads may occur during periods of market stress, and tracking error remains higher than US-listed ETFs.

Figure 4: Bid-ask spread as a percentage of various ETFs

Currency Risk

Although denominated in HKD, underlying exposures include KRW, TWD, JPY, and RMB. 

Currency movements, particularly JPY volatility and RMB depreciation, may affect returns.

Geographical risk 

Taiwan represents the largest non-diversifiable risk. With TSMC and MediaTek constituting ~30% of the fund, any escalation of China-Taiwan tensions would have severe implications for the global semiconductor supply chain and fund performance.

For more risk, kindly refer to the prospectus of the fund. 

Key Takeaway 

The Global X Asia Semiconductor ETF (HKEX:3119) is a sophisticated instrument that offers a differentiated way to participate in the next phase of the AI cycle, where value creation increasingly depends on physical capacity, manufacturing scale, and memory deployment rather than pure design leadership. 

The initial phase, characterised by the frantic buying of US chip designers has driven valuations to precipitous heights. We believe the next phase will be defined by the industrial scaling of AI, such as the building of physical capacity, the fabrication of billions of chips, and the mass deployment of memory.

With that, HKEX:3119 offers:

1. Unique Exposure: It bypasses the crowded software/design trade to focus on the tangible manufacturing base.

2. Strategic Diversification: It creates a portfolio counterbalance to US-heavy tech holdings (like QQQ or SMH).

3. Asymmetric Value: It trades at a deep discount (25x P/E) relative to its US peers

While the expense ratio of 0.68% is high, it is the toll paid for accessing the restricted and complex markets of the Fab Four. For investors willing to tolerate the geopolitical volatility of East Asia, HKEX:3119 represents a compelling opportunity to own the engines of the 21st-century economy at a wholesale price.

Declaration:

For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) and the analyst who produced this report hold a NIL position in the abovementioned securities.