The South Korean stock market has been breaking records, achieving the 5,000-point mark on the KOSPI and nearing 6,000, largely thanks to a booming semiconductor industry. This surge is attributed to the spillover effects of the current AI investment cycle, which is steering new economic and industrial paradigms, with companies like SK Hynix now holding a combined market capitalization of approximately 1,656 trillion won, representing about 64.7% of last year's nominal GDP in the country. The outlook remains optimistic as predictions suggest explosive profit cycles for major firms like Samsung Electronics and SK Hynix, with projected operating profits potentially reaching between 300 to 400 trillion won by 2026, positioning them as some of the top earners globally.

Morgan Stanley has highlighted that, based on this growth, Samsung Electronics is expected to lead in operating profits worldwide this year, followed closely by SK Hynix. This positions South Korean semiconductor companies to potentially outpace major global players in the AI sector, indicating that KOSPI's further rise seems justified. However, while the overall market cap of these firms collectively is half that of NVIDIA, they still face challenges such as the Korea Discount phenomenon. The question remains whether these firms have been appropriately valued in light of their profit growth, given their market caps are still below that of TSMC, Taiwan's leading semiconductor manufacturer.

The current global AI investment cycle combined with supply shortages suggests that South Korea's semiconductor super boom could continue into next year. Yet, amidst this flourishing landscape, there are concerns over potential risks such as chipflation—a term that merges 'chip' and 'inflation'. This refers to the rapid increase in memory semiconductor prices due to expanded AI investments, causing a rise in the costs of devices like laptops and smartphones, ultimately driving up consumer prices. Despite the current strong demand for semiconductors, this trend necessitates caution regarding the sustainability of growth in the sector.