Presidential policy chief does not consider demand for AI, semiconductors as temporary despite market volatility
Presidential chief of staff for policy Kim Yong-beom said that the sharp sell-off in the domestic stock market appeared to be a "DeepSeek shock," triggered by Chinese companies' advancements.
Kim Yong-beom, the presidential chief of staff for policy, speaks during a briefing on President Lee Jae Myung's July trip to the United States and South America at the Blue House press center on July 22.JOINT PRESS CORPS
SÃO PAULO, Brazil — Kim Yong-beom, the presidential chief of staff for policy who is accompanying President Lee Jae Myung on his state visit to Brazil, said on Tuesday that the sharp sell-off in Korea’s stock market appeared to be a “DeepSeek shock,” triggered by the planned initial public offering of China’s CXMT and Chinese companies’ advances in lithography equipment manufacturing.
“The domestic market is wondering whether the enormous investments by big tech companies can actually be translated into revenue and sustained through viable business models, as well as whether those investment levels can ultimately be justified,” Kim responded when asked about the sharp decline in the Kospi during a press briefing in São Paulo.
The Kospi closed at 6,023.66 on Tuesday, down 732.09 points, or 10.84 percent, from the previous trading session.
Addressing concerns over China’s expanding memory chip production — led by companies including CXMT — Kim said that the Chinese government is determined to foster CXMT and Yangtze Memory Technologies as “national champions.”
“China will make every effort over the long term to develop both companies, and given the country’s technological strengths, it could make significant advances,” he said.
He argued, however, that the latest market shock should be viewed as a signal for Korea’s semiconductor industry to invest even more aggressively.
“This shock has only reinforced my view that we need to pursue more policies supporting timely investments, fab construction and research and development,” Kim said. “I do not believe that the demand for AI and semiconductors — or their practical applications — is temporary.”
“Instead, I believe that such demand will remain solid, and what we are seeing now is the process of finding a new equilibrium,” he continued.
Kim Yong-beom, the presidential chief of staff for policy, speaks during a briefing on President Lee Jae Myung's July trip to the United States and South America at the Blue House press center on July 22.NEWS1
Kim then pointed to structural factors behind the Korean stock market’s volatility.
“Korean stock prices tend to move in tandem with the Philadelphia Semiconductor Index,” he explained. “Our market is especially volatile because retail investors trade very actively; a large market for related derivatives exists; and two companies, Samsung Electronics and SK hynix, account for a very large share.”
He added that leveraged exchange-traded funds (ETF) had become a more visible source of volatility since late May.
“The Financial Services Commission will continue improving the leveraged ETF system,” Kim said. “Beyond that, we also need to take a serious look at the derivatives market structure and the composition of investors, which are major sources of volatility in the capital market.”
He also remarked that semiconductors will likely continue to account for 40 to 50 percent of the domestic stock market.
“Whenever debate surrounding AI and semiconductors intensifies, our market is likely to experience some of the world’s largest swings,” Kim said. “[The government] plans to conduct a comprehensive review of market volatility with the Financial Services Commission and the Financial Supervisory Service.”
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
