Overview
Taiwan & South Korea are mainly developing market indices, fueled by their AI chip dominance. Taiwan’s market cap nears $4.6 trillion, while South Korea’s Kospi index crossed 7,000 points on record semiconductor earnings. This surge contrasts with India’s market cap decline of about 7% year-to-date in 2026, increasing the gap in foundational AI sector involvement.
Taiwan and South Korea Strengthen Their Position in the Global AI Value Chain
The sharp rise of Taiwan and South Korea in global emerging market indices signals a significant shift. These economies have integrated deeply into the AI value chain, commanding the manufacturing and memory infrastructure that powers artificial intelligence. This has driven their market capitalizations and index weights higher, reshaping the emerging market landscape. India’s lower growth highlights a growing gap in AI sector development.
AI Hardware Boom Accelerates Taiwan & South Korea’s Economic Growth
Taiwan has strongly secured the top position within the MSCI developing Markets Index, now representing 24.84 percent of its weight, a main shift from China’s important dominance. This ascent is powered by an AI hardware development, with Taiwan Semiconductor Manufacturing Company alone accounting for over 40 percent of the TAIEX’s market value. TSMC’s role as the essential manufacturer of advanced AI chips for global tech leaders like Nvidia & Apple has driven its market capitalization to an estimated $1.8 trillion, giving Taiwan’s total market cap nearing $4.6 trillion.
South Korea’s Kospi index mirrors this AI-driven success, developing the 7,000-point limit for the first time on May 6, 2026. The nation’s market size now stands at approximately $4.59 trillion, surpassing Canada to become the world’s seventh-largest equity market. This surge is mainly attributed to memory chip giants Electronics & whose HBM (High Bandwidth Memory) chips are important for AI applications. Electronics mainly broke the $1 trillion market capitalization issue. Semiconductors now constitute roughly 60 percent of Kospi’s operating profit.
Valuations Contrast as AI Leaders Build Strengths
The sharp difference in market performance is evident in valuation metrics. As of early May 2026, mainly lower than major markets. This low valuation, despite strong earnings growth, suggests a substantial re-rating potential for South Korea, supported by its vital role in the AI supply chain.
India’s AI Gap Limits Market Gains
India’s holding markets have experienced a decline of approximately 7 percent year-to-date in 2026, following an updated 2 percent growth in 2025. While large Indian IT firms like TCS & Infosys use AI-related services, these are mainly application-layer businesses, missing the essential hardware & chip design capabilities that drive the current AI growth. India has no listed equivalent to TSMC or a secure pipeline of public AI chip design startups. India’s absence from the core AI value chain means investors are missing out on a major growth area. Factors such as stretched valuations, muted earnings, & foreign outflows have contributed to India’s lower growth, but the main handicap remains its lack of direct AI sector exposure.
Conclusion
The developing influence of Taiwan, South Korea, & India in AI supply chains shows the increasing importance of semiconductor manufacturing, AI infrastructure, & technology development in the global economy. Taiwan & South Korea have improved their positions through advanced memory technology leadership & deep development into the global AI hardware ecosystem. Their strong presence in semiconductor production has allowed them to benefit mainly from the development in the whole world of demand for AI computing power.
Did you know?
AI’s role in Asia’s growth has increased sharply. In 2024, AI contributed only 0.26 percentage points to Asia’s real GDP growth of 4.1%. However, in 2025, its contribution jumped to 2.01 percentage points. This means nearly half of Asia’s growth in 2025 was driven by AI.
FAQ
1. Why are Taiwan and South Korea important in global AI supply chains?
Taiwan and South Korea play a major role in global AI supply chains because they lead in semiconductor manufacturing, AI chip production, and memory technologies that power artificial intelligence systems and data centers.
2. How does Taiwan contribute to the AI hardware industry?
Taiwan is a global hub for advanced semiconductor manufacturing, with companies like Taiwan Semiconductor Manufacturing Company producing high-performance AI chips for leading technology firms worldwide.
3. What is driving South Korea’s growth in the AI market?
South Korea’s growth is largely driven by strong demand for memory semiconductors and AI-related hardware. Companies such as Electronics suppliers of advanced memory chips used in AI infrastructure.
4. Why is India still developing its role in AI supply chains?
India has a strong IT services sector, but currently has limited large-scale semiconductor manufacturing and AI chip production capabilities. This has reduced its direct participation in the foundational AI hardware ecosystem compared to Taiwan and South Korea.
5. How can India strengthen its position in global AI supply chains?
India can strengthen its role by investing in semiconductor manufacturing, AI research, data center infrastructure, and domestic chip design initiatives while encouraging technology startups and foreign investments in the AI ecosystem.
