Chip, chip … boom? South Korean tech makers join the trillion-dollar club but some fear a short-circuit looms South Korea has become the world’s sixth-largest share market, surpassing major European economies, primarily driven by the explosive growth of AI chip demand which propelled SK Hynix and Samsung Electronics into the trillion-dollar company club. Despite record highs for the Kospi index and predictions of further gains, concerns are emerging about the market’s heavy dependence on these two chipmakers and the potential for a boom-bust cycle similar to the dot-com era. While AI hyperscalers provide strong underlying demand, the concentration of growth within a few companies leaves the Kospi exposed to market volatility and supply chain issues.

• South Korea has become the world’s sixth-largest share market, surpassing the UK, Germany, and France.
• The growth is largely attributed to AI-driven demand for chips, propelling SK Hynix and Samsung Electronics into the trillion-dollar company club.
• The Kospi index hit an all-time high of 8,880, marking a 220% rise in 12 months.
• Goldman Sachs predicts further gains, citing a “once-in-a-generation surge” in semiconductor earnings.
• Concerns exist about the Kospi’s over-reliance on two chipmaking companies, SK Hynix and Samsung Electronics.
• The rapid rise of tech stocks raises fears of an AI bubble, with comparisons made to companies before the 2000 tech bubble burst.
• The chip sector is known for its volatility, though AI demand is seen by some as underpinning current cycles.
• Samsung and SK Hynix have reportedly contributed up to 70% of the Kospi’s growth, indicating significant market polarization.
• The concentration makes the Kospi highly exposed to global AI spending cycles and supply chain disruptions.
• The Kospi’s VIX volatility index hit an unusually high level of 75, indicating investor panic buying due to fear of missing out.