Transcription
The AI boom is usually told as a Silicon Valley story. But some of the biggest winners are thousands of miles away – in South Korea.
This year, Samsung Electronics and SK Hynix have reaped the benefits of America’s AI spending surge. South Korea has two of the three hottest companies, dare I say, in the world right now as it relates to the AI trade. From January till May, South Korea's KOSPI surged almost doubled at one point, but since it's been a bit volatile. But in the grand scheme of things, the KOSPI has been one of the best performing markets.
But the surprise is where some of those stock market gains are showing up next: property. In South Korea, apartments — especially in Seoul — are more than just places to live. They are one of the country’s most trusted stores of wealth. As of end-March 2025, real assets accounted for 75.8% of Korean household assets, compared with 24.2% for financial assets. For high-end homes above 1.5 billion won (or about 1 million U.S. dollars), the share of purchase funds coming from stock and bond sales reportedly reached 13.2% in April 2026, after staying below 5% in previous years.
Housing market has provided very stable return for very long time. Before this massive rally, housing market return was around 4% per year, but the stock market is just like 1% with really you know the high volatility. And that created a lot of the social problem as well.
That creates a chain reaction: America’s AI spending helps create chip wealth in Korea. Some of that wealth flows into property. And in an already expensive housing market, that can add pressure on people who do not yet own assets. So, Korea’s AI windfall is becoming a two-sided story: corporate profits and market gains on one side – and a deepening asset divide on the other.
South Korea’s place in the AI trade starts with memory. Nvidia’s processors may get most of the attention. But AI systems also depend on high-bandwidth memory, or HBM — fast, stacked memory that helps those processors move massive amounts of data. And right now, South Korean companies are among the most important suppliers.
Over the last few years, Hynix has dominated the HBM market. They had around 60% market share, with the rivals Samsung and Micron, both holding around 20%. So clear dominance by SK Hynix. This was partly because Samsung suffered from yield issues, so issues in manufacturing the chips and Micron were focused on a completely different technology altogether, so they really started on a back foot. Now with HBM4, that dynamic is beginning to change.
Samsung Electronics and SK Hynix now account for more than half of the KOSPI’s market value. So, when those two stocks rise, they can lift the whole index with them. This shows up in share prices — and in workers’ paychecks. SK Hynix promised their workers last year that they would pay 10% of their operating profit as bonuses, and that equates to around 700 million won, or if you round it up, half a million dollars. That's 15 times more than the average salary that an average South Korean took home. Samsung workers, specifically those in the memory chip division, they are expected to take home around 600 million won in bonuses. So that's a little less than SK Hynix, but still massively greater than what average Koreans make in one year.
But the key question isn’t just who benefits from the AI trade. It’s where that new wealth goes next. For many Korean households, stock-market gains are a pathway to property. Owning a home is sort of the Korean dream for all Koreans. I think in Korea is a reflection of what people consider as their safety net, an investment destination as well as a symbol of success. Their ultimate goal in Korea is to buy housing, and the stock market is kind of their stepping stone towards the housing market.
The Bank of Korea says stock-market gains are far less likely to turn into spending in Korea. There, just 1.3% of stock-market capital gains translate into consumption, compared with roughly 3 to 4% in the U.S. and Europe. For households that do not own their homes, the pattern is even clearer. About 70% of stock gains are estimated to flow into real estate. And that appears to be showing up in the market.
From January to April 2026, homebuyers used about 3.7 trillion won, or roughly 2.4 billion dollars, from stocks and bond sales to fund purchases. Nearly two-thirds of those proceeds went into homes in Seoul, with the largest concentration in three affluent southern districts: Gangnam, Songpa and Seocho. Prices in Seoul are rising. Recent data from Deutsche Bank show that Seoul is the third most expensive city to buy a home after Hong Kong and Zurich. So that really just goes on to show how expensive it is to buy homes in Korea.
That creates a policy problem. Korea has tried to steer household wealth away from overheated housing and into financial markets. The stock-market rally shows that part of the strategy has worked. But some of those gains appear to be making a round trip — back into property. That creates the paradox at the heart of Korea’s AI rally: the wealth is real, but its benefits are not landing evenly.
The Bank of Korea calls this a form of “complex polarization”: asset inequality is deepening because of real estate, while income inequality is starting to widen again as growth concentrates in a few high-paying industries. The divide starts with ownership. The Bank of Korea tracks the wealth gap between households that own real estate and those that do not. By 2025, that gap was close to 470 million won or about 315 thousand USD. That’s more than nine times average household income. For owners, rising property prices can add to wealth. But for non-owners, those same price gains make the starting line harder to reach.
This second chart compares median home prices with the net assets of households that don’t own a home. The higher the bar, the higher it is to buy in. The barrier has come down from its 2022 peak, but it remains far above where it was a decade ago. And for young non-homeowners, it’s rising again. It's something that the former Bank of Korea governor mentioned many, many times that he's seeing this K-shaped economy that's split between the tech sector and the non-tech sector, and we're seeing it spill over into sort of our more day-to-day lives.
That brings Korea to another risk. The danger is not that one stock market sell off would immediately crash home prices. It’s that the same wealth channel pushing stock gains into housing depends on confidence. When chip stocks rise, investors have gains to cash out, employees expect bigger bonuses, and buyers have more money for down payments. But if those gains fade, some of that confidence can fade too. It's really long-term potential threat to the economy, not just the economy but society as a whole.
Recently the government is pushing for like the mega project. So basically you know the broadening the gains from the chip sectors to other sectors, and they want to cultivate new growth engine for future growth. If we see the chip cycles declining very sharply, it can have like a massive negative impact on growth inflation and the household wealth.
I think the Korean government and companies are trying to reinvest the money that they have earned into areas that that they think will be the next jackpot, and I think physical AI is one area, robotics is another, which is why we saw Jensen Huang come to Korea and sign all those agreements. So, if there is a slowdown or a downturn, Korea will inevitably be exposed, but for now, until 2028, chip demand looks to be there, and so it's something we'll have to see.