Asia’s biggest semiconductor firms have become the new focal point of the AI-driven market upswing, pumping fresh momentum into Seoul’s equity market and generating outsized payouts inside the industry.
Three firms now sit atop the region’s market capitalisation rankings: Taiwan Semiconductor Manufacturing Co, Samsung Electronics and SK Hynix. Their recent earnings have drawn attention to the critical role they play within the global AI hardware chain and have driven substantial gains across regional bourses.
Market moves and investor behavior
South Korea’s benchmark KOSPI has roughly doubled in just over six months as chip-related stocks run ahead. The rally has pulled in both institutional and retail investors. Leveraged purchases of KOSPI equities by South Korean retail investors - colloquially known as "ants" for their collective trade behaviour - reached a record 25 trillion won in late April, according to the data cited in reporting.
Individual investors say they are chasing gains they missed in earlier rallies. "After the rally of semiconductor stocks, other AI-related stocks will now have to catch up," said Kwon Soon-kuk, a 34-year-old office worker who is participating in the market now after missing the post-pandemic rally in 2020.
Profits, capacity and bargaining power
Chip revenue dynamics at major Asian manufacturers have been dramatic. Samsung reported that chip revenues leapt nearly 50 times in the most recent quarter, and the company’s first-quarter profit rose eightfold. Chips accounted for 94% of Samsung’s record 57.2 trillion won total profit. Samsung’s stock has more than doubled this year and the company crossed the $1 trillion market capitalisation threshold, becoming only the second Asian firm to do so after Taiwan Semiconductor Manufacturing Co.
SK Hynix has seen a similar re-rating. Once valued at under $100 billion as recently as 16 months ago, it is now closing in on $800 billion, a valuation that places it within reach of major global banks in terms of market capitalisation. The company has agreed to share 10% of its annual operating profit with workers; based on the figures cited, that could translate into an average payout of $680,000 per worker in 2027, according to calculations reported.
Investors point to structural supply tightness and long-term contracts as reasons for confidence. "It’s a seller’s market for AI suppliers," said Alex Huang, chairman of Fubon Financial Holding’s fund arm, which holds TSMC shares. "Rather than pricing, what Nvidia is worried about is failing to secure capacity," he said. "When it comes to setting product prices and passing on costs to customers, Taiwan has formidable power."
Those multi-year supply commitments are also seen as signals that the AI investment cycle may extend longer than some expect. "Asian chipmakers have signed multi-year agreements with customers," noted Sam Konrad, investment manager at Jupiter Asset Management, and he interpreted those deals as evidence the AI cycle could persist. Nearly half of his fund is invested in Taiwan and South Korea.
Regional economic spillovers
The windfall from chips is spilling into national economies. Taiwan posted a 13.69% jump in first-quarter GDP, the largest increase in almost four decades, while South Korea reported 1.7% growth, its fastest pace in nearly six years. Analysts attribute much of this acceleration to the capital spending of cloud service providers and the heavy utilisation of manufacturing capacity.
"It’s all built on AI," said Chris Lo, a vice president for Nomura Asset Management Taiwan, pointing to a year-on-year growth rate of 70% for capital expenditure from cloud providers and noting the potential for upward revisions. "Many Taiwan companies’ production capacities have been fully booked through 2027," he added.
Andy Wong, head of multi-asset investment at Pictet Asset Management, characterised Asia’s tech hubs as compact but technologically advanced contributors to the AI buildout: "In certain tech themes, Asia has the best companies in the world," he said, naming niches such as memory and foundry.
Broader demand links and customer concentration
The global AI ecosystem’s demand is flowing through Asian suppliers. Taiwan Semiconductor Manufacturing Co, Samsung and SK Hynix count the U.S. technology giants often labelled the "Magnificent 7" among their customers and also sell hardware to Nvidia. That chain—from chip design to the factories that produce semiconductors and memory—has become a key conduit for AI-driven revenue growth.
"The result has been a gusher of cash into the accounts and stock of almost anyone along the AI supply chain, and with Asia at the heart of chip manufacturing, the region has become the epicentre of the boom," said reporting in the data summarized here.
Warnings and risks
Despite strong momentum, some market participants caution about overextension. Nick Ferres, chief investment officer of Vantage Point Asset Management in Singapore, said: "My sense is that it is getting dangerous." He highlighted concerns about excessive valuation pressure and the distortions that can arise from concentrated flows into a handful of names.
Market structure shifts have already produced noteworthy products. A Hong Kong-listed exchange-traded fund tracking SK Hynix became the world’s second-largest single-stock leveraged ETF, attracting HK$40 billion in the seven months since its launch.
Global investor flows also show recent volatility. Investors withdrew nearly $50 billion from South Korean and Taiwanese equities in March, and only around $7 billion flowed back in the weeks after, suggesting positioning remains sensitive to broader market sentiment.
Nonetheless, some portfolio managers remain constructive. "We’ve added ... and continue to see further upside," said Ian Samson, a multi-asset portfolio manager at Fidelity International, referring to markets in Taiwan and South Korea. He argued that near-term positioning, which has recently improved, is what matters most regardless of longer-term valuation debates.
What this means for markets
The confluence of historic profit jumps, capacity constraints and long-term supply deals has shifted the centre of gravity for AI-related investment toward Asian manufacturers. That dynamic has lifted equity values, boosted economic growth figures in the region and produced material compensation developments inside the supply chain.
At the same time, the ecosystem’s reliance on a cluster of large customers and the pace of capital spending by cloud providers create both opportunity and vulnerability. The current environment prioritises firms that can guarantee production and scale; it also highlights how sensitive the cycle is to any change in financing or demand among the largest AI consumers.
Currency references used in underlying figures: $1 = 1,452.3000 won; $1 = 7.8313 Hong Kong dollars.