Why Taiwan's AI Edge Outweighs South Korea's Memory Bet

what happened

In a Reuters column, Manishi Raychaudhuri compares two Asian markets that depend heavily on AI investment but have been hit unevenly. He reports that KOSPI has fallen more than 44% from its June 22 peak, while TAIEX is down 20% from its October 6 high. Year to date, KOSPI is up about 17% and TAIEX about 35%.

The valuation gap is even starker. KOSPI's forward price-to-earnings ratio fell from 12.4 in October 2025 to 4.1 on November 6, while TAIEX's multiple stayed within a range of 14 to 20. According to FactSet consensus, Taiwan's current forward P/E is 14.4, more than three times South Korea's.

The author attributes the difference to the structure of AI exposure. Taiwan's listed companies cover the whole chain, including TSMC, MediaTek, ASE Technology, Hon Hai, Quanta and Delta Electronics. South Korea relies mainly on memory, and Samsung Electronics and SK Hynix together account for roughly half of KOSPI. Memory prices are highly cyclical, so a slump could force a sharp cut to earnings forecasts.

why it matters

For markets, South Korean retail investors have taken on substantial margin debt to buy single-stock exchange-traded funds, which raises the risk of sharp reversals. According to the column, foreigners sold a net $14 billion of South Korean stocks in October, compared with $31 billion in Taiwan. The author argues that a low multiple alone will not stop foreign outflows.

market impact

KOSPI and Korean chipmakers: memory price cyclicality and foreign outflows weigh on the sector

• ▼KOSPI pressure down — foreign outflows and reliance on cyclical memory chip prices
• ▼Samsung Electronics and SK Hynix pressure down — a slump in memory prices would hit earnings expectations

instruments

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