Samsung down 5%, SK Hynix slips 7%: is South Korea too dependent on AI boom?

Samsung Electronics and SK Hynix fell sharply on Friday as a selloff in US chip stocks spilled into South Korea, raising fresh questions about the country’s heavy dependence on the artificial intelligence boom.

The KOSPI opened 3.66% lower and later dropped as much as 5.7%, prompting the Korea Exchange to trigger a sell-side sidecar that briefly suspended programme trading.

Samsung Electronics fell more than 5% in early trade, while SK Hynix dropped nearly 7%, making the two chip giants the biggest drags on Seoul’s benchmark index.

The immediate trigger came from Broadcom after the US chipmaker reported strong quarterly numbers, but its AI semiconductor outlook fell short of investors’ stretched expectations.

Broadcom's earnings were the spark

Broadcom guided for AI semiconductor revenue of about US$16 billion (approx. $22.3 billion) in the current quarter, a jump of more than 200% from a year earlier.

On paper, that is hardly weak, but it was below the level investors had priced in after months of almost uninterrupted enthusiasm for AI chips.

The stock fell more than 12% in the US, dragging other semiconductor names lower and by the time Seoul opened, the damage had already travelled across time zones.

South Korea was hit harder because its market has become unusually exposed to the same AI hardware trade.

Samsung and SK Hynix are the centre of gravity for the KOSPI, the country’s export engine and the global memory-chip supply chain.

That makes Seoul highly sensitive to any hint that AI infrastructure spending may be slowing, even when the signal comes from a company based in California rather than one based in Korea.

Friday’s move was also intensified by profit-taking after a powerful rally in Korean technology shares, as well as broader uncertainty around geopolitical risks.

But Broadcom’s earnings showed how little room there is for disappointment when valuations, earnings upgrades and foreign inflows are all tied to the same AI story.

Korea’s export boom is also its concentration risk

Analysts say the deeper issue for South Korea is structural.

The country has long relied on semiconductors as its primary growth engine, but the AI boom has intensified that dependence to an uncomfortable degree.

Goldman Sachs strategist Tim Moe recently said the Korean equity rally has been driven overwhelmingly by the “AI hardware theme,” warning that markets tied too closely to a narrow group of exporters become more vulnerable to swings in global technology spending.

That concentration has become increasingly visible in the trade data.

South Korea’s exports surged in May, powered largely by semiconductor shipments tied to AI servers and data-centre demand.

Memory exports, particularly high-bandwidth memory used in AI accelerators, have become the backbone of the country’s recent earnings and equity-market strength.

Samsung Electronics and SK Hynix now dominate the global HBM market, placing South Korea at the centre of the AI infrastructure buildout.

But analysts warn that the same dominance also creates fragility.

Researchers at the ASEAN+3 Macroeconomic Research Office (AMRO) have cautioned that South Korea remains heavily exposed to external shocks through semiconductors, especially given its dependence on a small group of US hyperscalers for AI demand.

The concern is straightforward: if AI capital spending slows or geopolitical tensions disrupt supply chains, the effects could spread rapidly across Korea’s exports, corporate earnings, currency and broader equity market.