The South Korean stock market, which once soared due to artificial intelligence (AI) euphoria, is now facing a wave of correction. Two global tech giants from the Land of the Morning Calm, Samsung Electronics and SK Hynix, recorded significant stock price declines of more than 30 percent from their peak. This phenomenon has triggered questions among market participants regarding the sustainability of the previously highly aggressive investment trend in the AI sector.
In fact, both corporations, along with U.S.-based manufacturer Micron, control the majority of the global dynamic random-access memory (DRAM) market. For NAND memory, South Korean manufacturers even control nearly half of the global market share. The presence of these cutting-edge memory chips is crucial for AI infrastructure. Prior to the correction, their stock performance grew phenomenally; SK Hynix surged up to 549 percent year-on-year, while Samsung posted a 271 percent gain over the same period.
The recent sharp decline was triggered by investor caution, as they began to question whether billions of dollars in capital expenditure on AI infrastructure can yield commensurate profitability in the future. In addition, macroeconomic factors have further complicated the situation. The Bank of Korea's decision to raise its benchmark interest rate for the first time in three years has squeezed market liquidity and reduced the attractiveness of risky equity assets.
Market tension has been exacerbated by MSCI's decision to keep classifying the South Korean stock market as an emerging market, limiting capital inflows from global index funds. On the other hand, industry competition is intensifying with the emergence of alternative manufacturers from China, such as ChangXin Memory Technologies (CXMT), which are starting to be eyed by global technology designers as backup suppliers.
Despite being hit by high volatility, the long-term fundamentals of South Korea's semiconductor industry are deemed not to have shifted significantly. High-bandwidth memory (HBM) products from Samsung and SK Hynix remain indispensable core components for artificial intelligence servers. For long-term investors, the current stock price fluctuations can actually be seen as a natural consolidation phase before the next potential growth.
