Hedge funds bet big on South Korean chipmakers amid AI surge

  • Hedge funds are heavily investing in South Korean chipmakers like SK Hynix and Samsung Electronics due to anticipated AI-driven demand for high-end memory chips.
  • These investments are buoyed by South Korea’s $19 billion support for the chip industry, despite risks such as currency fluctuations and local trading restrictions.

Hedge funds are diving into undervalued South Korean chipmakers like SK Hynix and Samsung, banking on their pivotal role in the AI tech boom. With strong government support and rising global demand for advanced memory chips, these investments promise substantial returns amid geopolitical tensions and market uncertainties.
–Jasmine Zhang, BTW reporter

What happened

Hedge funds are investing heavily in South Korean chipmakers like SK Hynix and Samsung Electronics, anticipating a surge in demand for high-end memory chips due to the AI boom. Firms such as Man Group, FengHe Fund Management, and CloudAlpha Capital Management see these companies as undervalued compared to Nvidia and Taiwan’s TSMC.

SK Hynix, a major supplier to Nvidia, benefits from a lower price-to-earnings ratio and significant revenue from AI-related chips. The South Korean government’s $19 billion support for the chip industry further bolsters these investments.

Hedge funds believe the potential rewards outweigh risks like a depreciating won and local short-selling restrictions. This influx of capital has boosted South Korea’s Korea Composite Stock Price Index (KOSPI), which saw its best performance in seven months in June.

Beyond chipmakers, investments are also expanding into sectors like electricity equipment, driven by the AI ecosystem’s growth.

Also read: SK Hynix will invest $75B in AI and chips by 2028

Also read: Samsung secures advanced AI chip order from Preferred Networks

Why it’s important

In the frenzied world of tech investing, hedge funds are making bold moves into South Korea’s chipmakers, seeing them as undervalued gems in the AI revolution. With giants like SK Hynix and Samsung Electronics lagging behind their peers, funds like Man Group and FengHe are betting big on a resurgence fueled by soaring demand for high-end memory chips.

This isn’t just a financial play; it’s a strategic bet on South Korea’s pivotal role in the global tech supply chain, bolstered by hefty government support and innovative corporate strategies.

As these firms race to meet the demands of generative AI and beyond, the rewards could reshape not only portfolios but also the competitive landscape of AI technologies worldwide. Amid currency risks and market restrictions, the allure of South Korea’s tech sector shines bright, promising substantial returns for those willing to ride the wave of innovation and geopolitical dynamics.


Jasmine Zhang

Jasmine Zhang is an intern reporter at Blue Tech Wave specialising in AI and Fintech. She graduated from Kunming University of Science and Technology. Send tips to j.zhang@btw.media.

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