Chip, chip ... boom? South Korea 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 after the Kospi index surged 220% in 12 months to an all-time high of 8,880, powered by explosive demand for artificial-intelligence chips that has created two trillion-dollar companies in Seoul [1]. SK Hynix and Samsung Electronics have both crossed the $1tn market-capitalisation threshold, joining Taiwan’s TSMC in a club that until recently had no Asian members outside China [1]. SK Hynix shares have risen 1,000% over the past year, while Samsung has gained 500% [1]. Goldman Sachs raised its 12-month Kospi target to 9,000, describing the moment as a “once-in-a-generation surge” in semiconductor earnings [1]. The rally has reshuffled the global equity league table. South Korea and Taiwan have vaulted over India, leaving the UK, Germany and France behind [1]. “I’m watching it in Seoul, and I still have to keep pinching myself,” said Peter Kim, global investment strategist at KB Securities [1]. Nvidia, the first company to reach a $5tn valuation, sits at the centre of the AI ecosystem [1]. Its latest consumer graphics cards, the GeForce RTX 50 series built on the Blackwell architecture, are manufactured by TSMC on a custom 4N process node [5]. Nvidia chief executive Jensen Huang, visiting Taiwan in late May, said the island was “booming” and outlined plans to invest $150bn a year there [1]. The three memory-chip makers feeding AI’s voracious appetite are Samsung, SK Hynix and US-based Micron Technology [1]. Micron, founded in 1978 in Boise, Idaho, is the only major American computer-memory manufacturer and one of the “Big Three” alongside the two South Korean firms [6]. It became a trillion-dollar company in May 2026 amid surging demand for its high-bandwidth memory chips [6]. Russ Mould, investment director at AJ Bell, cautioned that share-price charts for the three memory makers bear similarities to some companies in 2000, just before the tech bubble burst [1]. The 2000s decade saw the rise of the internet and the rapid catching-up of emerging economies, but ended with the 2008 financial crisis and the Great Recession [4]. Mould, however, argued that boom-bust cycles in the chip sector are now behind the market “thanks to demand from AI” [1]. Concentration risk is drawing scrutiny. Kim said his firm’s research indicates Samsung and SK Hynix have contributed up to 70% of the Kospi’s growth in 2026 [1]. The Kospi’s VIX volatility index hit 75 this week, far above its historical average of about 20 [1]. Ipek Ozkardeskaya, a senior analyst at Swissquote, noted the spike was unusual because the VIX typically rises during selloffs, not rallies. “The spike in the VIX, alongside the Kospi’s historic rally, shows that investors today are rather buying in panic, scared to miss out on something big,” she wrote [1]. Geopolitical tensions add another layer of uncertainty. The US-China trade war, which began in 2018, escalated sharply in 2025 under the second Trump administration, with Washington imposing a 145% tariff on Chinese goods and Beijing retaliating with a 125% tariff on American goods [2]. The measures are forecast to cause a 0.2% loss of global merchandise trade, though both sides have excluded certain items and continue to seek a resolution [2]. Kim said a “dramatic shift” is under way as investment flows move from software platforms to hardware. He added that traditional institutional investors long believed Asia was “there to just pick up the scraps,” but “I feel that sentiment has turned” [1].