ETFs With Skin In The Apple-Samsung Suit

August 23, 2012

ETF-land warily awaits reverberations of a federal court's ruling in the Apple-Samsung patent suit.

A number of ETFs with heavy weightings in Apple or Samsung are sure to be affected when the maker of the iPhone’s month-long patent infringement suit against the South Korean tech giant wraps up. Deliberations began on Wednesday and a verdict could come Friday.

Apple is seeking over $2.5 billion in damages from Samsung, charging that Samsung took three months to rip off features of the iPhone that took years to develop, according to a report in the Wall Street Journal. Samsung attorneys are meanwhile arguing that Apple is using courts to avoid competing in the marketplace, the Journal said.

That said, Samsung itself is seeking $22.8 million for another set of patents and a maximum of $399 million in royalties for patents related to high-speed data technologies, the Journal said. The stakes are very high indeed, as Samsung is now the world’s No. 1 maker of smartphones and is Apple’s top rival in the market for tablets such as the iPad.

So, Apple’s and Samsung’s stocks hang in the balance, as do ETFs that own them. At the top of that list is the $34.4 billion PowerShares QQQ Trust (NasdaqGM: QQQ) and the $2.6 billion iShares MSCI South Korea Index Fund (NYSEArca: EWY), both of which are heavily invested in the tech giants. QQQ has 18.8 percent of its holdings in Apple, and 23 percent of EWY’s portfolio is in Samsung.

The case, being held in federal court in San Jose, Calif., a major city in the heart of Silicon Valley, has drawn significant media attention. That’s partly because San Jose is so close to Apple’s headquarters in Cupertino, Calif., but also because the case could have far-reaching implications.

Apart from the two tech giants, a number of well-known companies in the world of tech—such as Microsoft, Google and Nokia—are entangled in their own web of patent battles regarding mobile devices.

Funds besides EWY with heavy weightings in Samsung include:

  • iShares MSCI All-Country Asia Information Technology Index Fund (NYSEArca: AAIT), with 17.6 percent in the Korean company
  • iShares S&P Asia 50 Index Fund (NYSEArca: AIA), which holds a 15.8 percent in Samsung


Funds beside QQQ with heavy weightings in Apple include:

  • iShares Dow Jones U.S. Technology (NYSEArca: IYW), 23.7 percent
  • Technology Select Sector SPDR ETF (NYSEArca: XLK), 19 percent
  • iShares Morningstar Large Growth Index Fund (NYSEArca: JKE), 15.5 percent



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