For the DRAM you need in these AI servers, there are three companies that make it. It’s really hard to do. This is as close to magic as science can get. – Gavin Baker, Founder and CIO, Atreides Management
For the DRAM you need in these AI servers, there are three companies that make it. It’s really hard to do. This is as close to magic as science can get.
South Korea has been the world’s best equity market over the past year, returning 136%. The rally has also become unusually concentrated, with Samsung and SK hynix now comprising more than half of the market capitalization of the Korean equity index, Kospi. Buying Korean equities has become predominantly a bet on the future of AI memory.
These eye-popping returns have been driven by demand for the memory chips required to build and operate AI data centers. High bandwidth memory (HBM), a type of high-performance dynamic random access memory (DRAM), are critical inputs for that buildout. Only three companies can manufacture the most advanced versions at scale. SK hynix, Samsung and Micron sit at the center of that market, giving Korea two of the three leading manufacturers tied to one of the most important inputs in AI infrastructure.
The result is a national equity market increasingly defined by two companies. SK hynix and Samsung have experienced explosive stock price appreciation over the past year, reflecting investor enthusiasm for the firms closest to a critical part of the AI buildout. Their combined weight now exceeds the rest of the KOSPI, meaning broad Korean equity exposure has become increasingly tied to one narrow part of the AI supply chain.
This concentration echoes a broader pattern in the AI trade. Investors have moved from one perceived bottleneck to the next, including model platforms, GPUs, foundries, power, data centers, cooling, electrical equipment and, now, memory. Each stage has had real fundamentals behind it, while also showing how quickly the AI investment boom can concentrate capital around a narrow group of perceived winners.
A similar dynamic appeared in Taiwan, where TSMC became more than half of the MSCI Taiwan Index as investors treated the company as a critical bottleneck in advanced semiconductor manufacturing. Korea now extends that pattern to memory, with Samsung and SK hynix turning the KOSPI into another national equity market increasingly defined by one part of the AI supply chain.
The rally in Korean HBM manufacturers has been supported by strong fundamentals, not just AI hype. Demand for advanced memory has tightened supply, lifted pricing power and driven major earnings revisions. Bubbles often form around real stories, and the AI buildout, HBM scarcity and earnings recovery are real stories. The risk is that markets extrapolate those stories into index-level concentration that becomes difficult to sustain.
Korea’s equity market now carries a large, embedded bet on AI memory. What looks like broad country exposure has become a concentrated supply-chain wager on the durability of the AI cycle, with more than half of the KOSPI tied to Samsung and SK hynix. The question is how much of an entire equity market should depend on one narrow trade.
Between the Lines is a weekly blog by DoubleLine Portfolio Managers Sam Garza, Joseph Mezyk and Quant Analysts Fei He, CFA and Sunyu Wang that breaks down topical macro and market issues. For questions or suggestions please e-mail us at betweenthelines@doubleline.com. The views and opinions expressed herein are those of the authors and do not necessarily reflect the views of DoubleLine Capital LP, its affiliates or employees.
