South Korean Investors Pivot to AI Chips as Samsung and SK hynix Ride Surging HBM Demand

Singapore state investor Temasek has made its first foray into South Korean equities by acquiring stakes in Samsung Electronics and SK Hynix, extending its artificial-intelligence strategy into the memory-chip supply chain. The fund views memory semiconductors as one of the most undervalued segments of the AI ecosystem, where investor attention has largely centered on advanced processors and computing infrastructure.

Shares of Samsung Electronics and SK Hynix climbed as much as 6% intraday following news of Temasek’s purchases. The Singapore fund plans to raise AI-related investments to 15% of its portfolio over the next five years. As of the report’s publication, Temasek had not disclosed the purchase value, ownership percentages or exact transaction dates.

SK Hynix and Samsung Electronics produce roughly two-thirds of the world’s memory chips and are central to the high-bandwidth memory supply chain powering AI servers. Their heavy weighting in South Korea’s Kospi makes the benchmark unusually sensitive to shifts in the AI trade. Volatility has also been amplified since regulators approved 16 single-stock leveraged exchange-traded funds tied to the two companies in late May.

The Kospi closed 10.84% lower at 6,023.66 on July 28, prompting the Korea Exchange to impose a 20-minute marketwide halt. SK Hynix sank 14.7% and Samsung Electronics lost 13.4%. An attempted rebound failed on July 29, when the benchmark fell about 7.5% intraday as SK Hynix and Samsung dropped nearly 13% and 8%, respectively. The renewed selling reflected concerns over AI infrastructure financing, rising Chinese competition and leverage-driven fund outflows.

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.

South Korea’s equity market is heavily influenced by Samsung Electronics and SK Hynix, making the semiconductor cycle and foreign investor sentiment central to the KOSPI’s direction. Moody’s said second-quarter economic growth may slow, adding to concerns over the broader outlook. Still, AI-driven semiconductor exports remain a key source of support for the trade-dependent economy and a potential counterweight to weaker domestic momentum.

The KOSPI plunged 5% on July 20 as Samsung Electronics and SK Hynix led declines. Morgan Stanley cut its bearish-case target to 6,000 points, while Citi and Goldman Sachs also issued cautious assessments the same day. The selloff contrasted with longer-term industry optimism: SK Hynix’s chairman forecast that global demand for AI chips will surge 60% to 100% next year.

Explosive growth in global demand for AI chips and high-bandwidth memory is making South Korea’s semiconductor industry increasingly strategic to the global supply chain. Chailease Securities Investment Advisory said the South Korean government’s push for special semiconductor legislation and stock-market reforms is providing policy benefits to the country’s technology giants. The industry shift is reshaping the global technology supply chain and offers investors an important avenue into the long-term AI trend, drawing market attention to the medium- and long-term prospects for South Korean equities.

In its latest assessment released in July 2026, Chailease Securities Investment Advisory said South Korean chip leaders SK hynix and Samsung Electronics have strong medium- and long-term growth momentum as they benefit from the AI chip boom. With the government rolling out a 26 trillion won semiconductor support plan and recently stepping up efforts to advance special legislation, the firm advised investors to build positions gradually through regular fixed-amount investments or by adding holdings on market declines to capture the long-term trend.

Demand for high-bandwidth memory, or HBM, from AI data centers has pushed profits at Nvidia suppliers Samsung Electronics and SK hynix to record highs, helping the Korea Composite Stock Price Index, or KOSPI, nearly triple within 12 months. Employee bonuses and stock-market gains are being converted into home down payments, spreading the chip boom from financial markets to Seoul and semiconductor hubs while widening disparities in wealth and housing affordability.

Samsung’s union and management reached an agreement in May 2026 under which employees are expected to receive average bonuses of 600 million won in early 2027. SK hynix pledged to allocate 10% of its 2026 operating profit, with brokerages estimating that each employee would receive at least 400 million won. KB Real Estate data for June showed that the average price of a three-bedroom home at Dongtan Lotte Castle in Hwaseong was 1.6 billion won, up 28% from a year earlier. The average price across 11 prime Seoul districts reached 1.96 billion won in May, up from 1.68 billion won a year earlier, while transaction volume doubled over six months to 8,245 deals.

SK Hynix is a major supplier of high-bandwidth memory (HBM) to AI chipmakers including NVIDIA. The expansion of AI data centers by Microsoft, Google and Meta has driven up memory demand and prices. As of 2025, SK Hynix held 61% of the global HBM market, far ahead of Samsung Electronics’ 17%, making it a key force reshaping South Korea’s semiconductor industry.

SK Hynix shares closed 5.6% higher on June 22, 2026, lifting its market capitalization to 2,080.4 trillion won, or about $1.35 trillion. That surpassed Samsung Electronics’ 2,066.7 trillion won valuation excluding preferred shares, ending Samsung’s reign as South Korea’s most valuable company since 2000. SK Hynix also plans to issue about $27 billion of American depositary receipts on Nasdaq as early as mid-to-late July.

The expansion of AI data centers has fueled memory-chip demand, making Samsung Electronics and SK Hynix the main engines of South Korea's stock market. Together, the companies account for 54% of the KOSPI's market capitalization and nearly three-quarters of its gains this year. That has left South Korea's $4.9 trillion stock market highly concentrated, with both the index and leveraged retail-investor positions at risk if AI capital spending cools.

As of June 4, 2026, the KOSPI had risen more than 100% for the year, but it plunged as much as 7% intraday on June 5. Foreign investors have sold a net 15.8 trillion won since the start of June. The Korea Financial Investment Association said margin-financing balances hit a record 38 trillion won on May 29. Although Goldman Sachs raised its index target to 12,000 from 9,000, the market still faces a liquidity test from a potential Bank of Korea interest-rate increase in July.

Demand for Nvidia's AI accelerators drives orders for high-bandwidth memory, or HBM. Samsung Electronics and SK hynix together account for nearly half of the KOSPI's market capitalization, magnifying the impact of Nvidia's outlook on South Korean stocks. Samsung's labor dispute also involved 45,000 union members and threatened semiconductor output, making the removal of strike risk another major catalyst for investors betting on the AI supply chain.

After the market closed on May 20, 2026, Nvidia reported FY2027 first-quarter revenue of $81.6 billion, up 85% from a year earlier and above the $79.2 billion market estimate. It issued second-quarter guidance of $91 billion. On May 21, Samsung reached an agreement with labor on an average 6.2% pay increase and called off the strike. The KOSPI closed 8.42% higher at 7,815.59, with Samsung Electronics up 8.51% and SK hynix gaining 11.17%, prompting the Korea Exchange to activate a buy-side sidecar.

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.