The iShares MSCI South Korea ETF (EWY) and the iShares MSCI Taiwan ETF (EWT) are the two most direct country ETF expressions of the global AI semiconductor supply chain — and they were moving in close alignment before the Iran war began on February 27, 2026. Since the war started, they have diverged sharply. EWY is down approximately -3.54% this week and has surrendered much of its pre-war gains. EWT is essentially flat on the week and holding +10.00% YTD. The divergence is not random; it reflects structural differences in portfolio concentration, energy import exposure, currency dynamics and valuation that become decisive when a geopolitical energy shock is the dominant market factor.

According to Country ETF Tracker data, EWY trades at $121.33 as of March 27, down from a high above $134 before the war — while EWT trades at $69.88, near its year-to-date highs. Barron's reported this week that "the Iran war and consequent blockage of the Strait of Hormuz offer a stark reminder of a different geopolitical risk" — specifically flagging Taiwan as a separate risk scenario that investors are now pricing alongside the energy shock. Reuters noted that "before the Iran war, Asian equities were rallying on the back of an earnings boom driven by AI enthusiasm" — the question for both EWY and EWT is how much of that pre-war earnings story survives the current macro disruption.

Overview: Two Funds, One Supply Chai

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Both EWY and EWT track MSCI indices for their respective markets and both are managed by BlackRock with identical 0.59% expense ratios. The similarity ends there.

The valuation gap — 10.29x for EWY vs 20.30x for EWT — is the most analytically significant number in the comparison. EWT trades at nearly double EWY's forward P/E, reflecting two distinct market assessments: the market views Taiwan's TSMC as a monopolistic AI infrastructure asset worth a premium, while South Korea's Samsung and SK Hynix face more competition-based earnings uncertainty and carry an additional energy import discount that the war has amplified.

Performance Comparison: Pre-War and Since Feb 2

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The performance split between pre-war and post-war is stark and tells the story of two fundamentally different market dynamics converging in the same geopolitical shock.

Pre-war (Jan 1 – Feb 27): Both EWY and EWT surged on AI semiconductor demand. EWY had built a +35% YTD return by late February — the highest in the country ETF universe — driven by Samsung and SK Hynix winning Nvidia HBM4 contracts at GTC 2026. EWT was up approximately +10% on TSMC's Taiwan GDP-driving AI wafer capacity.

Post-war (Feb 27 – Mar 27): EWY has given back approximately -11 percentage points from its peak, while EWT has held its gains with minimal erosion. The differential is approximately 10 percentage points of relative underperformance for EWY in less than a month.

The reversal dynamic is clear: EWY over-ran pre-war and is correcting post-war; EWT ran less but has proven more resilient. On a full-year basis EWY still leads — but the momentum has definitively shifted to EWT in the current environment.

Portfolio Structure: Samsung/SK Hynix vs TSM

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The fundamental difference between EWY and EWT lies in their top-of-portfolio concentration and what those holdings produce.

EWY's top two positions — Samsung Electronics (22.8%) and SK Hynix (000660.KS) at 20.6% — represent 43.4% of the fund in two companies. Both produce High Bandwidth Memory (HBM) chips for Nvidia GPUs. Both announced landmark deals at GTC 2026 in March. The AI earnings thesis for both is intact. However, Samsung and SK Hynix are also major consumer electronics and DRAM commodity producers, meaning their earnings have a cyclical component beyond the AI capex cycle that pure-play AI infrastructure companies like TSMC do not carry. Samsung's foundry business (competing with TSMC) has been losing market share, creating an earnings drag that partially offsets HBM strength.

EWT's top position — TSMC (2330.TW) at 21.2% — is followed by Delta Electronics (4.7%), MediaTek (4.0%) and Hon Hai/Foxconn (3.9%). TSMC is a structurally different business from Samsung or SK Hynix: it is a contract manufacturer with no competing product ambitions, benefiting from every chip designer in the world needing its advanced nodes. TSMC cannot be substituted. Samsung's foundry can — and increasingly is, as Apple and others have diversified toward TSMC exclusively. This structural moat difference justifies a significant portion of EWT's premium P/E relative to EWY.

The concentration structure also creates different tail risks. EWY at 43.4% in two names is more sensitive to Samsung-specific or SK Hynix-specific news flow. EWT at 21.2% in TSMC is highly concentrated in one name but that name has fewer idiosyncratic risks because it is a supplier to the entire industry rather than a competitor within it.

Energy Import Exposure: The War Variabl

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Both South Korea and Taiwan rely heavily on Middle Eastern energy. This is the factor that has most directly pressured EWY relative to EWT since February 27.

South Korea imports approximately 98% of its energy requirements and is the world's fourth-largest LNG importer. The Bank of America AI Matters report published on March 19 noted that "Korea and Taiwan rely on the Middle East for nearly 70% of their crude oil imports and 20–25% of their LNG imports." Both are structurally exposed.

However, the equity market impact has been more severe for EWY than EWT for two reasons. First, Korea's industrial base is more diversified — Hyundai Motor (9th in EWY), steel producers and heavy chemicals companies all absorb higher energy costs through their production economics, creating a broader impairment than Taiwan's more narrowly semiconductor-focused market. Second, the Korean won has depreciated more than the New Taiwan dollar since the war began, amplifying USD-denominated losses in EWY relative to EWT.

Morningstar reported this week that "Iran war threatens AI semiconductor chip supply chain" — specifically flagging that SK Hynix and TSMC "production and profits rely on scarce materials that are being cut off." The supply chain disruption risk is real for both, but the equity market has absorbed it more through EWY's broader Korean industrial complex than through EWT's tighter semiconductor focus.

Valuation: The Premium Debat

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The 10.29x vs 20.30x forward P/E comparison is the central analytical tension in the EWY-EWT comparison.

The bear case on EWT's premium: 20.30x for a market that is 21% concentrated in a single company (TSMC) and faces both energy import costs and a separate geopolitical risk scenario (China-Taiwan tensions highlighted by Barron's this week as "lurking in your portfolio") seems expensive relative to the fundamental earnings risk. Taiwan is not geographically safe in the way Norway is — it faces a distinct existential threat that the Iran war has made investors notice. Barron's explicitly noted that the Hormuz closure "offers a stark reminder of a different geopolitical risk" — meaning Taiwan's chip supply could be disrupted by a very different kind of conflict.

The bull case on EWY's discount: 10.29x for a fund that contains Samsung and SK Hynix — the only two companies that can supply the HBM memory Nvidia needs — represents a compelling value entry after the war-period correction. If the Iran war resolves and energy costs normalise, EWY's multiple should re-rate toward its historical average while the AI earnings thesis remains structurally intact. At 10.29x, EWY is pricing in a prolonged energy shock and geopolitical discount that the Polymarket ceasefire probability curve suggests is temporary.

Correlation: Do EWY and EWT Diversify Each Other

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EWY and EWT carry a 5-year pairwise correlation of 0.71 — one of the highest cross-country correlations in the emerging market universe. That high correlation reflects their shared exposure to global tech demand cycles, US semiconductor capex and the Taiwan-Korea supply chain integration.

For portfolio construction purposes, holding both EWY and EWT simultaneously provides less diversification benefit than their different market labels might suggest. An investor seeking semiconductor supply chain exposure through country ETFs can achieve most of the desired factor loading through a single position in either EWY or EWT, with the choice between them becoming a valuation and risk preference decision rather than a diversification one.

At 0.71 correlation, adding EWT to an EWY position increases tech supply chain concentration while adding only 29% of an independent return stream. Investors seeking genuine diversification against EWY would be better served by a low-correlation commodity play (EWZ at 0.47) or a European energy importer (EWG at 0.62) than by EWT.

Key Differences Summar

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Conclusio

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EWY and EWT are the same trade expressed through different risk profiles. Both provide AI semiconductor supply chain exposure; both face the same energy import headwind from the Iran war; both will benefit from a ceasefire-driven energy cost normalisation. The differences are: EWY is cheaper (10.29x vs 20.30x), more volatile (43% in two names vs 21% in one), more exposed to Korean industrial sector energy costs, and facing a mean-reversion trade after its pre-war overshoot. EWT is more expensive, more defensively structured around TSMC's monopoly position, and carrying an entirely separate geopolitical risk — China-Taiwan tensions — that the Iran war has brought back into investor consciousness.

Compare EWY and EWT live from February 27 using the Compare Tool at countryetftracker.com.

Frequently Asked Question

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What is the main difference between EWY and EWT?

EWY is concentrated 43% in Samsung and SK Hynix — HBM memory suppliers — at 10.29x forward P/E. EWT is concentrated 21% in TSMC — the world's only manufacturer of advanced AI chips — at 20.30x P/E. Both are AI supply chain plays; EWY is cheaper and more volatile, EWT is more expensive with a stronger structural moat.

Why has EWY underperformed EWT since the Iran war began?

South Korea's industrial base — steel, chemicals, automotive alongside semiconductors — absorbs energy cost increases more broadly than Taiwan's narrower semiconductor focus. The Korean won has also depreciated more than the New Taiwan dollar, amplifying EWY's USD-denominated losses.

Is EWY cheap at 10.29x forward P/E?

EWY at 10.29x is a 45% discount to the MSCI ACWI at 18.83x. The discount reflects the energy import shock, the pre-war overshoot correction and a structural Korea discount. Samsung and SK Hynix's AI earnings remain intact — the discount is a macro headwind discount rather than a fundamental earnings impairment.

Do EWY and EWT provide portfolio diversification from each other?

At a 5-year correlation of 0.71, they provide limited diversification benefit when held together. Both are tech supply chain plays that move together during global risk events. For genuine diversification against EWY, low-correlation positions like EWZ (0.47) or ENOR (0.55) are more effective.