AI Rally Tested Even as Korea Surges Past India | Insight with Haslinda Amin 06/02/2026

Key Concepts

• Edge AI: AI processing performed locally on devices (on-premise) rather than in the cloud, reducing latency and increasing privacy.
• Agentic AI: AI systems capable of orchestrating and coordinating multiple sub-agents to perform complex workflows autonomously.
• Physical AI: AI integrated into robotics, heavy machinery, and transportation systems to enable autonomous physical operations.
• Hyperscaler Capex: Massive capital expenditure by major tech firms (the "Big Five") to build out AI infrastructure.
• Memory Intensity: The critical demand for high-performance memory (DRAM, NAND, HBM) required to power AI hardware.
• Supply Chain Bottlenecks: Constraints in critical components like MLCCs (Multi-Layer Ceramic Capacitors), optical fiber, and rare earth minerals.

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1. Market Dynamics and Regional Shifts

• South Korea vs. India: South Korea has overtaken India as the world’s sixth-largest equity market, with a $5 trillion market cap (up 86% this year). This is driven by Samsung and SK Hynix, both reaching $1 trillion valuations due to AI memory demand.
• Macroeconomic Reality Check: South Korea faces inflationary pressure (3.1%), leading to a rotation out of speculative "Edge AI" and robotics stocks that are not yet monetized.
• Indian IT Sector: Indian IT stocks have lagged behind US software counterparts but are showing signs of recovery. Analysts suggest a rotation from hardware to software is underway, with Indian IT firms beginning to articulate clearer AI strategies.

2. Investment Strategy and Portfolio Management

• Diversification: M&G Investments is reducing exposure to memory and foundries, shifting capital toward connectivity, wafers, and specialized chemicals.
• Capex Discipline: Unlike previous cycles, supply chain players are showing discipline by not flooding the market with excess capacity, which keeps prices high but sustainable.
• The "Bubble" Question: Portfolio managers argue that while valuations are high, the focus should be on identifying "bottlenecks" where capital has not yet flowed, such as power infrastructure, nuclear energy, and water infrastructure.
• Defense Spending: A structural shift is occurring in defense, with global economies increasing spending (targeting 3–5% of GDP). This is driving demand for non-traditional defense tech like optical fiber for drones and maritime steel.

3. The AI Hardware and Software Ecosystem

• Nvidia’s Influence: CEO Jensen Huang emphasizes that AI is a "GDP generator" and dismisses concerns about job losses, arguing that AI increases the demand for software engineers by making them more productive.
• Advantech’s Edge AI Strategy: Advantech is targeting 30% of total revenue from Edge AI. They are collaborating with Nvidia on "AI Factory" blueprints, using simulation and training frameworks to deploy AI models directly to industrial floors.
• MediaTek’s Growth: MediaTek is pivoting toward data centers, projecting a move from near-zero revenue to $2 billion this year, with expectations to capture 10–15% of a $70–80 billion Total Addressable Market (TAM).

4. Notable Quotes

• Jensen Huang (Nvidia CEO): "People talk about AI reducing jobs. Complete nonsense. It's causing more software engineers to be hired."
• Vicas Pashad (M&G Investments): "The math ain't mathing in some parts of [the supply chain]... the narrative has taken over relative to fundamentals."
• Linda Sai (Advantech COO): "Physical AI is the one, in addition to agentic [AI], that will be booming in the upcoming months, not years."

5. Real-World Applications and Case Studies

• Steph Curry & Li-Ning: NBA star Steph Curry signed a 10-year deal with Chinese sportswear giant Li-Ning. This is viewed as a strategic move to capture the high-end Chinese basketball market, mirroring the successful long-term strategy used by Anta with Klay Thompson.
• Industrial Automation: Advantech is deploying "collaborative robots" (cobots) and mobile manipulators in factories to address labor shortages, moving beyond simple automation to intelligent, autonomous machine operation.

6. Synthesis and Conclusion

The current AI rally is transitioning from a speculative phase to a structural buildout. While hardware-heavy sectors (memory, chips) have seen massive gains, the market is now rotating toward software, infrastructure, and specialized industrial applications. Key risks include macroeconomic inflation, potential monetization bottlenecks for hyperscalers, and supply chain constraints for critical materials like gallium and germanium. However, the consensus among industry leaders is that we are in the early stages of a multi-year AI revolution that will fundamentally reshape global productivity and industrial architecture.