Leading semiconductor stocks in South Korea today boosted the wider market as investors placed their bets on a sustained demand in AI chips. The main KOSPI index added 1.8% finishing at 2,580.20, though information technology stocks were most prominent.

Market giant Samsung Electronics posted the highest increase of 4.5% to hit a fresh 52 week high. The company planed to launch mass production of next-gen AI memory chips from the next year, the company announced recently. Experts claimed that based on the technology and size of its production line Samsung would be much better positioned for exploitation of the Artificial Intelligence bonanza.

In the same period, a smaller rival SK Hynix was also a much bigger winner, rising 7.2%. The memory chip specialist has been actively pursuing a higher market share in a much higher bandwidth HBM segment that is relevant to AI usage. Its shares have surged more than two folds in the current year following expectations of increase in the amount of sales linked to AI that would boost its profits.

Other semiconductor related shares also rose. Chip equipment maker Tokyo Electron Korea was up 6.8%, and material supplier SK Materials was up 5.3%. The robust show of chip stocks pushed up the technical KOSDAQ index by 2.3%, said a report.

“A new semiconductor super cycle is expected to be led by Artificial Intelligence,” added Choi Yoo-june of Shinhan Investment Corp “And this is especially beneficial to Korea given its technology leadership in both memory and foundry services.”

The increase is positive although the problems are still unfolding in the more general memory chip space where supply has outpaced demand this year to put pressure on prices. Yet, the investigation stated that there is still a growing demand for the AI segment due to a shortage of high performance chips.

Apart from technology stocks of the chip sector, other stocks that have an association with the technology industry were also evidently on the higher side. South Korea’s internet giant Naver Corp increased by 3.2 percent after the company booked measures to strengthen up its AI operation by American chip maker Nvidia. Kakao Corp, which runs the country’s most used messaging app, added 2.8%.

What has been positive in tech has helped keep some disappointment in some other areas in check. South Korean automakers Hyundai Motor and Kia both fell as investors locked in recent profits. Small-capitalization and conglomerate issues and some financial and industrial shares were again relatively left behind in the market’s advance.

Although the trading was somewhat flat the turnover was impressive as more than 700 million shares were traded on the main board. Is foreign investors as acquisitive as they were in other markets, they were buying a net 890 billion won ($665 million) of local shares. This is in line with a rising trend of interest in the Korean market among foreigners in the past year.

Today’s economic reports revealed that the South Korean consumer sentiment has increased in September have hit their highest level in five months. The composite consumer sentiment index by the Bank of Korea went up to 103.1 from 101.3 in August indicating households are turning more positive on the economy.

In the next releases, investors will pay special attention to the reports of the leading companies of this industry and their AI-related revenue growth. The Korean electronics giant is expected to unveil its outlook for its third quarter, preliminary results, in early October which is expected to indicte tone of the sector.

It is worth noting that current valuation metrics have improved equally due to the sharp run in chip stocks, yet most feel like there is further upside left in the market given the large endogenous growth driver in AI. While their forecast is largely optimistic they also expressed concern that volatility could rise in the near-term for the sector.

‘It is evident that we are within the hype cycle for AI at the moment’, said Kim Young-chan, head of research of NH Investment & Securities. ‘On the whole, the prospects are very promising, although investors should expect certain problems on the way to the development of the technology’.

In other market news, the Korean won was up 0.7% against major currency and ended the day at 1,330 KRW per USD. The year so far has seen this currency under pressure due to dollar strength across the board and so-dollar appreciation was good news to traders today.

Further, yields on government bonds also fell as people moved their money from safe-haven investments such as bonds to riskier ones like equities. The benchmark 10-year Korean treasury bond saw its yield drop by 5 basis points apiece of 3.65%.

That is why today’s results emphasize the increasing significance of the AI theme for South Korean financial markets. As the Korean leading companies invest heavily in AI chips and technologies, more investors see Korea as special in the AI race.

Korea really has a chance to strengthen its position of an AI leader, the economist from HI Investment & Securities Park Sang-hyun said. “If our companies can sustain a technology advantage, it could form the basis of the next round of expansion for the total economy.”