South Korean Stocks Surge as AI Chip Scrutiny Sparks Major Rebound and Industry Optimism

South Korean Stocks Surge as AI Chip Scrutiny Sparks Major Rebound and Industry Optimism​

The South Korean stock market staged a significant recovery on Friday, surging 5.8% as uncertainty over the global AI boom led investors to scrutinize the sustainability of the industry’s massive growth cycle. The rally was led by major chipmakers Samsung Electronics Co. and SK Hynix Inc., both registering gains exceeding 8%.

The volatile sentiment pervading the market has been marked by whipsaws, following a near 10% decline in the previous two trading sessions. This sharp downturn followed concerns over industry overcapacity, which previously led to SK Hynix experiencing its largest daily plunge since 2008, while Samsung tumbled by 9%.

Chipmaker Power Drives Kospi Rally​

The recovery underscored the critical dependence of Korea’s equity market on its two dominant chip manufacturing firms. Local funds increased their positions in these stocks, though foreign funds and retail investors recorded net selling against the benchmark indices. The Korea Exchange even briefly halted program buying as Kospi futures dramatically jumped following the surge.

Samsung's solid performance was boosted by news that Anthropic PBC is engaging with Samsung to co-develop a custom AI chip. This development significantly bolstered expectations surrounding the Korean chipmaker’s foundry capabilities and future outlook.

Strategic Significance of AI Semiconductor Supply Chain​

Industry experts highlighted the strategic weight of this development, recognizing its far-reaching implications. Jung In Yun, chief executive officer at Fibonacci Asset Management Global, noted that while the Anthropic-Samsung partnership is still in early stages with limited near-term earnings impact, it remains strategically positive. He added that the move reinforces Samsung's crucial role within AI chips and underscores Asia’s pivotal position in the global semiconductor supply chain.

Korea has performed as one of the world’s best equity markets this year. However, its disproportionate reliance on the two chip giants means the nation is highly vulnerable when sentiment surrounding the core technology sector shifts dramatically. Leveraged exchange-traded funds have amplified both the recent volatility and the eventual sharp reversals in the market.

Investor Focus Shifts to Samsung Earnings Report​

Attention across the financial world is now intensely focused on Samsung's forthcoming preliminary earnings report scheduled for Tuesday. Analysts anticipate a massive turnaround, with expectations placing the preliminary operating profit at 85 trillion won ($55.3 billion) for the June quarter—an 18-fold increase from the previous year.

Gary Tan, a portfolio manager at Allspring Global Investments, emphasized the importance of these earnings results for the global chip industry. While investors are primed for solid numbers, he advised that the focus will shift beyond expectations to scrutinizing any signals that support the sustainability of the memory upcycle during management commentary.