From Asia Times, July 8:
South Korea, Taiwan and Japan are all riding the same AI wave — and all are heavily exposed to the same potential AI crash
TOKYO — South Korea has long been one of the world’s best early-warning systems. Its US$1.9 trillion economy is open, large, and sits at the intersection of every major shift in trade, finance and technology. Right now, Seoul, true to form, is flashing red about the risks of betting it all on artificial intelligence.
No major economy has pivoted its core growth engine faster or more abruptly than the one President Lee Jae Myung has led since June 2025. Ask the average Korean on New Year’s Day what defined their economy, and they’d likely have said cars, ships, smartphones, or K-pop. Six months later, the answer is unanimous: AI.
Investors are less sure the bet is paying off. The nearly $5 trillion Kospi index has been swinging like a meme stock — erratic behavior for a top-10 global bourse by market cap. It’s a case of the tail wagging the dog: a rally powered by two or three companies and an unproven technology now dwarfs the country’s GDP by more than 2.5 times. That concentration has become the Lee administration’s problem to manage.
Monday’s 5% Kospi drop barely raised eyebrows by recent standards. The index has hit 12 circuit-breaker halts in its history — six of them this year alone.
The sell-off came despite Samsung Electronics posting a record 1,800% jump in year-on-year profit on nearly double the sales. If anything, the scale of that number unnerved investors further, stoking fears that AI infrastructure spending is running ahead of actual demand for machine-learning tools....
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