South Korea's AI Chip Dominance Fuels Investment Opportunities

South Korea's semiconductor sector, particularly its dominance in high-bandwidth memory (HBM), is emerging as a key beneficiary of the global artificial intelligence surge. While U.S. and Taiwanese markets have seen substantial gains, South Korean stocks are now capturing investor attention due to a significant shift in corporate profitability driven by AI hardware demand.

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Samsung Electronics is expected to leap to the second most profitable company globally, and SK Hynix will rise to sixth, with profitability approaching that of Apple.

Samsung Electronics and SK Hynix are projected to see dramatic profit increases, with Bloomberg forecasts placing them as the second and sixth most profitable global companies in 2026. Their combined 79% market share in HBM, a critical component for AI computing power, underscores their pivotal role. This dominance is reflected in the KOSPI 50 index, which boasts an estimated earnings per share growth rate of 185% for the next year, far exceeding Taiwan's 41% and trading at a historically low price-to-earnings ratio of 8.7.

Recent developments further bolster the outlook for Korean tech giants. SK Hynix's planned listing of American depositary receipts on the U.S. stock market is expected to boost its valuation. Both Samsung and SK Hynix have made advancements in next-generation HBM technology, stacking up to 16 layers. Additionally, Samsung's foundry business has secured orders from major international clients. The South Korean government's commitment to investing $1.2 trillion in new semiconductor clusters and AI data centers, coupled with efforts to upgrade the market's MSCI classification to developed status, provides a strong long-term foundation for investment.

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Currently, the two major memory giants in Korea hold a high market share of 79% in the global high-bandwidth memory market and control 68% of the dynamic random-access memory market, allowing Korean companies to significantly benefit from the global top-tier computing power dividend.

To capitalize on this growth, Yuanta Securities Investment Trust is launching the Yuanta Korea KOSPI 50 ETF (stock code 009829), set to open for subscription from August 3 to August 7. This ETF will track the KOSPI 50 index, focusing on the 50 largest companies listed on the Korea Exchange. The index is heavily weighted towards information technology (over 73%), with additional exposure to industrial, financial, and consumer sectors. While the ETF offers a way to invest in memory and chip manufacturing, investors are cautioned about risks including global tech market fluctuations, geopolitical factors, and currency volatility.

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Facing the global massive artificial intelligence infrastructure business opportunity, investors have mainly relied on Taiwanese stocks to grasp wafer foundry and server assembly links in the past. If the Korean market is included, it can supplement the puzzle of memory and chip manufacturing.