South Korea's Once-Hot AI Stocks Lose Institutional Favor as Taiwan Gains on Deeper AI Supply Chain Integration

The Quick Take

• South Korea's AI-linked equity stocks are struggling to attract buyers as doubts grow over whether the memory chip boom has peaked and whether Korea has the breadth of AI supply chain exposure that Taiwan offers.
• Taiwan is gaining favor with institutional investors due to its wider and deeper linkages across the AI supply chain, from TSMC foundry services to packaging specialists and AI-specific chip designers.
• The capital rotation from Korean AI stocks toward Taiwanese peers signals a maturation of the AI trade: investors are differentiating on supply chain depth rather than simply buying any semiconductor exposure.

South Korean AI-linked equities — led by Samsung Electronics and SK Hynix on the memory side and several AI software plays — are facing a buyer drought as investor confidence in the memory chip boom trajectory wavers. Business Times Singapore's analysis identifies the core issue: South Korea's AI equity exposure is heavily concentrated in high bandwidth memory (HBM) and DRAM — specifically SK Hynix's dominance in HBM3e supply to Nvidia and other AI accelerator makers. This concentration creates high-beta performance when AI demand is unambiguously strong but leaves investors vulnerable to any doubt about whether HBM demand growth is decelerating or whether Nvidia's next-generation architecture requires less HBM per unit.

Taiwan's advantage is structural: TSMC's position as the foundry for virtually every advanced AI chip — Nvidia Blackwell, AMD MI300X, Google TPU, Amazon Trainium — means Taiwan captures revenue across every AI chip generation regardless of which AI company wins market share. Beyond TSMC, Taiwan has ASE Group (advanced packaging critical for chiplets), MediaTek (AI edge inference chips), and specialized design houses that collectively create a fuller and more diversified AI supply chain exposure. Institutional investors allocating to an AI hardware basket increasingly prefer Taiwan's comprehensive exposure over Korea's HBM-concentration bet.

Watch SK Hynix's Q3 earnings for HBM order book update — any signal of demand softening beyond current projections would confirm the institutional concern driving capital rotation. Monitor Taiwan Semiconductor Manufacturing (TSM) monthly revenue data for evidence of sustained AI chip production demand that validates Taiwan's position. The decisive macro variable: Nvidia's Blackwell and next-generation GPU launch trajectory, as HBM demand is directly linked to GPU unit volumes, making Nvidia's supply chain ordering behavior the most important leading indicator for SK Hynix's 2027 earnings.

Synthesized from 1 source.