TL;DR
Last Friday, the global semiconductor sector plunged, triggering a trading halt in Korean stocks on Monday, with Samsung Electronics and SK Hynix leading the market decline.
· But over the weekend following the sharp decline, Jensen Huang made a high-profile visit to South Korea and strengthened cooperation with Korea’s AI supply chain, prompting the market to reassess whether this marks the peak of the AI cycle or simply a clearing of overcrowded trades.
· Underlying assets: 000660.KS (Korean stock), 005930.KS (Korean stock), NVDA (U.S. stock), MU (U.S. stock), AVGO (U.S. stock), EWY (Korean ETF), SOXX (U.S. ETF)
The Korean stock market has just experienced its most severe drop this year.
After market open on Monday, the KOSPI fell nearly 9% intraday, triggering a circuit breaker. Samsung Electronics and SK Hynix both plunged sharply, prompting market discussions on whether the AI bull market has reached a turning point.
But at the same time that the market was panicking and selling off, something else was happening in Seoul.
Jensen Huang kicked off his trip to South Korea over the weekend, meeting with SK Group Chairman Choi Tae-won and announcing a new multi-year partnership between NVIDIA and SK Hynix to co-develop next-generation memory products for AI data centers. He also held intensive discussions with leading Korean tech companies including Samsung Electronics, LG, and NAVER, reiterating that AI infrastructure development is still in its early stages.
As a result, a strikingly contrasting scene has emerged in the market.
While South Korea’s leading AI companies are facing concentrated selling pressure, the core customers of the AI industry chain are continuing to strengthen their ties with South Korea’s supply chain.
If AI demand truly begins to collapse, Jensen Huang wouldn't need to fly specifically to Seoul to strengthen cooperation.
This is also why new debates have begun in the market today.
Is the Korean market truly anticipating the peak of the AI cycle, or is it undergoing a typical high-level deleveraging?
South Korea has become one of the most AI-sensitive markets in the world.
Although this decline occurred in Korea, the trigger did not come from Korea.
Last Friday, the U.S. semiconductor sector experienced significant selling pressure. The Philadelphia Semiconductor Index recorded one of its largest single-day declines in recent years, with AI infrastructure-related companies such as Broadcom and Micron also pulling back. Subsequently, the market began reassessing its exposure to high-valued tech stocks.
South Korea has become the most directly affected market.
Over the past year, the primary drivers of South Korea's stock market rise have not been domestic economic factors, but rather AI data center construction, growing demand for HBM, and the expansion of NVIDIA's supply chain.
Samsung Electronics and SK Hynix together hold a very high weight in the South Korean market. When global capital seeks to bet on AI infrastructure, South Korea is one of the most convenient entry points; and when capital begins to reduce its AI positions, South Korea naturally becomes one of the easiest markets to sell off.
Therefore, the decline in the Korean market was much greater than that of the U.S. market itself.
In a sense, South Korea is no longer just a country index, but more like a large AI memory ETF.
Jensen Huang’s visit to South Korea stands in stark contrast to market panic
If market panic stems from valuation, then the biggest positive news over the weekend comes from the industry chain itself.
The core objective of Jensen Huang’s visit to Korea was clear: to further strengthen NVIDIA’s collaboration with Korea’s AI supply chain. Of particular interest was the announcement of a new multi-year partnership between NVIDIA and SK Hynix. Over the past two years, HBM has become one of the most critical components in AI servers, and SK Hynix has been one of the primary beneficiaries.
This is also why the market is closely following this collaboration.
Over the past few months, as AI infrastructure scaling has expanded, the market has begun to worry whether demand for HBM is nearing its peak. But Huang’s visit to Korea at this time actually sends the opposite signal. If NVIDIA believed AI data center construction was nearing its end, it would have no reason to continue strengthening long-term partnerships with suppliers at this juncture.
From an industry chain perspective, there is no evidence that AI demand has suddenly disappeared.
The most interesting aspect over the past two days has been here. Capital markets are expressing concerns about AI sector valuations through stock prices, while the core companies in the industry continue discussing expansion and collaboration plans for the coming years. A clear disconnect remains between the prices the market is assigning and the signals being sent by the industry.
The AI bull market is entering the profit pool reevaluation phase.
This is also the current point of greatest divergence.
Over the past year, the market has priced in a very simple logic: growing demand for AI. As a result, NVIDIA, Micron, SK Hynix, and Samsung Electronics have all risen, and nearly every company tied to AI has seen its valuation increase.
But as the sector's gains continue to expand, the market enters its second phase.
Investors are no longer satisfied with the story that "AI will grow"; instead, they are asking another question: Who will benefit from the profits created by AI growth? Over the past few months—from Rubin’s cabinet system memory adjustments, to market reactions following Broadcom’s earnings report, to this recent market crash in Korea—the underlying message has been the same: the market is beginning to dissect the AI profit pool.
SK Hynix benefits from HBM, Samsung Electronics is investing in HBM, DRAM, and advanced packaging, while Micron benefits more from overall memory upgrades in AI servers. Although all are part of the AI supply chain, their sources of profit and pricing power differ.
In the past, the market was willing to grant valuation expansion to the entire sector, but now capital is beginning to scrutinize each individual company to see if these profits can truly be realized.
This is why a supply chain update, an earnings guidance, or even a change in capital expenditure can trigger significant volatility across the entire sector. The focus of market trading has shifted: investors are now more concerned about who will ultimately report the growth, rather than whether AI continues to grow.
It is not Korea that determines the direction of the Korean stock market.
Over the coming weeks, the true determinants of the Korean market's direction will remain NVIDIA orders, HBM supply and demand, and cloud providers' capital expenditures.
If this data begins to weaken, this crash may be just the beginning of a larger valuation adjustment.
But if data center construction, GPU shipments, and HBM procurement continue to grow at a high pace, Monday’s circuit breaker more closely resembles a concentrated unwinding of a crowded trade.
At least for now, the prices offered by the market do not fully align with the signals coming from the industry chain.
While South Korea’s leading AI company faces its most intense selling pressure in recent years, Jensen Huang meets with supply chain partners in Seoul to discuss the next generation of AI infrastructure.
Who is closer to reality may soon be answered.
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