Samsung, SK Hynix and TSMC are minting record profits off the AI boom. Outside the chip plants, wages stall, debt climbs, and workers are now demanding a cut.
The AI build-out has made South Korea and Taiwan home to the few companies the world cannot run its models without, and the money is staggering. But the windfall is concentrated in a sector that employs a sliver of each population, leaving a two-track economy where chip shareholders soar and everyone else falls behind.
In Seoul, retirees are cashing in life insurance to buy chip stocks. In Taichung, machine-tool factories are putting workers on unpaid leave. The same AI demand is producing both, and it is forcing an uncomfortable question into the open: when a handful of companies capture almost all the gains, who actually gets paid?
What Happened
The hunger for AI chips has triggered a market boom in both economies unlike anything in years. South Korea’s benchmark KOSPI is the best-performing major stock index in the world so far this year. Samsung and SK Hynix have each crossed $1 trillion in market value, with Samsung shares more than doubling in 2026 and SK Hynix tripling. South Korea’s exports jumped 53 percent year over year in May to a record monthly high, prompting the Bank of Korea to raise its growth forecast.
The frenzy is just as intense in Taiwan, which overtook India last month to become the world’s fifth-largest equity market. TSMC, maker of the most advanced AI chips, now accounts for more than 40 percent of the value of Taiwan’s benchmark index and carries a market capitalization approaching $2 trillion.
The mania also cuts both ways. Korean stocks plunged about 10 percent on Tuesday, setting off a global tech sell-off, before rebounding more than 3 percent the next day.
The Backstory
This is not a broad-based boom. It rests on a narrow set of companies that make the chips AI physically cannot work without.
Samsung and SK Hynix dominate high-bandwidth memory, the chips that let AI systems store and move the enormous volumes of data they need. TSMC manufactures the most advanced logic chips on the planet. Together, that handful of firms has become indispensable to the global AI rollout, which all but guarantees demand for their output and hands them pricing power most exporters can only dream of.
The numbers show how lopsided it has become. TSMC has reported more than $60 billion in revenue so far this year, up roughly 30 percent from a year earlier. Taiwan’s economy grew nearly 13 percent in the final quarter of 2025 and almost 15 percent in the first three months of 2026, among the fastest rates anywhere. You can read the deeper version of that story in our breakdown of Taiwan’s chip boom.
The Plan
The concentration was not an accident. It was policy.
Rather than shoring up the industries that struggled, both governments leaned harder into their prized chipmakers, offering tax breaks and infrastructure to keep the foundries and memory plants ahead of global rivals. The bet paid off spectacularly for the chip sector. It also starved everything else.
Mark Ke, who has run his family’s textile business near Changhua for nearly five decades, supplied international brands and even produced material used in the balls for the 2014 World Cup. As Chinese and Southeast Asian rivals undercut him, he watched the government channel its support toward AI instead. The direction of state support, he told The Times, is misplaced and fixed almost entirely on the AI industry. In Taichung, once a hub of hundreds of machine-tool businesses, tariffs and weak demand have pushed companies out of business and day laborers onto unpaid leave.
The Business Model Angle
Here is the part most coverage misses. The chip business is built to concentrate wealth, not spread it.
A foundry like TSMC or a memory giant like Samsung sits at a structural chokepoint: it is one of the only suppliers on earth that can reliably make a critical input, so pricing power follows automatically. That same advantage shows up in our roundup of the most profitable companies in the world, where the common thread is selling something rivals structurally cannot replicate.
But that model is capital-intensive and headcount-light. The value flows to shareholders and a small core of highly paid engineers, not to a broad workforce. Compare that to the legacy export sectors next door, petrochemicals, steel, auto parts, textiles, machine tools, which employ far more people at far lower margins and are now being squeezed by tariffs and Chinese competition. The result is mechanical: when your economy’s growth engine is a high-margin, low-employment sector, headline GDP can boom while most paychecks flatline. Most Taiwanese workers sit outside tech and earn under $1,500 a month. The boom barely touches them.
The Risk
Economists have a name for this split: a “K-shaped” divide, where some industries and income groups climb while others stall. Taiwan’s central bank warned this month that AI demand risks creating drastically different outcomes across society, with the wealthy thriving and low-income groups struggling.
The financial side is getting fragile. Chasing the AI bonanza, South Korean retail investors have funneled an outsized share of their money into the same two names: nearly 83 percent of net retail purchases on the KOSPI this year went to Samsung or SK Hynix, according to Toss Securities. Seniors are moving retirement savings out of safe assets and into volatile chip stocks. That concentration is exactly what amplified Tuesday’s 10 percent crash. Meanwhile household debt and property prices keep rising, and both currencies remain weak despite repeated government intervention.
Then there is the politics. Samsung workers recently threatened a strike that could have hit the global tech supply chain, demanding 15 percent of operating profit as bonuses; the company settled at 10.5 percent. With Samsung projected to clear roughly $200 billion in operating profit this year, bonuses in its chip division could reach as high as $430,000 per worker. South Korea’s average monthly wage last year was around $2,800. That gap is becoming a political fault line, and it is unlikely to stay contained to one company.
Quick Questions
What is the “K-shaped” divide?
It describes an economy where some sectors and income groups rise sharply while others decline at the same time. In Korea and Taiwan, AI chipmakers and their shareholders are the upper arm of the K, and most other workers and industries are the lower one.
Why doesn’t the chip boom lift everyone?
Chip manufacturing is high-margin but employs relatively few people. The gains flow mostly to shareholders and a small group of well-paid engineers, while legacy export industries that employ far more workers are being hit by tariffs and Chinese competition.
What is a “national dividend”?
It is a proposal floated by a senior aide to South Korea’s president to use tax revenue from AI-benefiting companies to redistribute some of the windfall to the broader public. It reflects a growing debate over how AI-era profits should be shared.
Is this only happening in Asia?
No. A K-shaped split has widened in many economies, including the United States, since the pandemic. Korea and Taiwan are an early, concentrated example of how the AI boom can sharpen it.
The Business Model Analyst Take
The chip boom is doing exactly what its business model is designed to do. A supplier sitting on a critical-input monopoly captures enormous value, and it captures it for shareholders, not for the labor market. That is a feature, not a glitch.
The interesting development is the pushback. The Samsung bonus fight and the “national dividend” trial balloon are early signs of a coming argument that will not stay in Asia: if AI profits concentrate this hard, governments and workers will start demanding mechanisms to claw some of it back, through bonuses, taxes, or transfers. For anyone watching where the AI economy is headed, the policy fight over distribution may end up mattering more than the next earnings beat. The companies that win the technology race are already obvious. Who gets to share the spoils is the question still up for grabs.
Based on reporting by Meaghan Tobin and Catie Edmondson for The New York Times, “A.I. Riches Fuel Economic Divide in Asia’s Chip Powerhouses,” June 24, 2026.
