KOSPI Rally's Heavy Reliance on Two AI Giants Raises Volatility Risk

SK hynix sits at the center of the artificial-intelligence hardware boom as demand for high-bandwidth memory, or HBM, expands alongside investment in AI servers and data centers. That exposure has made the chipmaker a bellwether for South Korea’s technology sector. A recent wave of leveraged position unwinding had intensified losses across semiconductor shares, leaving investors focused on when forced selling would subside and whether capital would return to the AI supply chain.

Sentiment improved as investors judged the market’s deleveraging cycle to be nearing an end and SK Group Chairman Chey Tae-won increased his holding in SK hynix. The move was viewed as a vote of confidence in the memory-chip maker and the broader AI investment cycle, helping drive the KOSPI up more than 16%. The report did not disclose the stake size, transaction value or exact purchase date, while analysts said AI infrastructure spending remained supportive of semiconductor demand.

The global expansion of investment in generative AI has boosted demand for memory chips and advanced semiconductors, making South Korea, home to supply-chain leaders such as Samsung Electronics and SK hynix, a major beneficiary. The long-standing “Korea discount,” driven by weak corporate governance and low shareholder returns, has also begun to narrow as the government pursues reforms.

As of July 2026, the KOSPI had risen 100% for the year and reached another record, led by technology stocks including SK hynix. South Korea’s total stock-market capitalization climbed to $3.76 trillion, overtaking Germany and France in succession to rank ninth globally. President Lee Jae Myung’s administration is also advancing corporate governance reforms, further strengthening investor confidence.

Generative AI has fueled demand for high-bandwidth memory (HBM) and server chips, putting Samsung Electronics and SK Hynix at the center of the global AI supply chain. Hedge funds are bullish on South Korea’s leadership in the memory market, betting that AI investment can continue to generate steady cash flow. Semiconductor stocks have consequently become the main engine driving South Korean equities higher.

Since the start of 2026, shares of Samsung Electronics and SK Hynix have risen 128% and 188%, respectively, helping the KOSPI surge about 80% and break above 8,000 for the first time. As South Korean retail investors chase the rally, margin-financing balances have climbed to 36 trillion won, boosting brokerage interest income while underscoring growing leverage and the rising risk of buying at elevated prices.

Generative AI is driving data-center expansion, making high-bandwidth memory, or HBM, a critical GPU component. Young South Korean investors are consequently shifting funds from cryptocurrencies into Samsung Electronics and SK hynix, betting on the companies’ positions in the global memory supply chain. The trend echoes Taiwanese investors’ longstanding enthusiasm for holding TSMC shares.

HBM demand has climbed rapidly in recent months, channeling market funds into Samsung Electronics and SK hynix and driving significant gains in both companies’ shares. The Korea Exchange’s KOSPI also surpassed 6,000 points for the first time, propelled by the AI chip rally and reflecting a clear shift among South Korean retail investors toward the AI hardware supply chain.