From Micron bonuses, Samsung strikes to nationwide dividends, the soaring Korean stocks are startled, is this a preview of the AI era?

The phrase "citizen dividend" caused a rollercoaster of plunges, rebounds, and recoveries in the Kospi index on a single trading day. As the Kospi continued to hit new historical highs, investors began to reevaluate a more difficult variable to quantify: the excess returns brought by AI, deciding whether they should be left to companies, employees, shareholders, or redistributed through fiscal mechanisms to the general public. On Tuesday, Kim Yong-beom, the chief policy advisor to the South Korean presidential office, wrote on Facebook that the tax revenue generated by the prosperity of AI should be used to pay a "dividend" to the citizens. This statement on Tuesday triggered drastic volatility in the South Korean stock market, with the Kospi index falling by as much as 5.1% during the trading session. He later clarified that the funding he discussed was the "excess tax revenue" generated by the AI boom, not a new windfall tax on corporate profits, leading to a gradual recovery in the index and significant rebound in the stock prices of Samsung Electronics and SK Hynix from their lows in the morning session. In fact, the distribution of AI profits in South Korea has already been fermenting on multiple levels, from wage negotiations in factory workshops to public statements from policymakers and record current account surpluses flowing overseas. These various threads collided on the same trading day, putting an important question at the center of the table: How should the risks of redistributing the unprecedented wealth created by AI be priced? "Citizen Dividend": A post causing market turmoil Kim Yong-beom is a key policy aide to President Lee Jae-myung and plays a crucial role in formulating the government's economic policies. In the controversial article that sparked the turmoil, he wrote that the semiconductor boom cycle would create a sustained super-surplus, bringing substantial unexpected tax revenue, and that "how to use this money is not an optional policy choice, but a systemic design issue that must be carefully considered." He warned that if the mistakes of the 2021-22 semiconductor boom cycle were repeated, allowing the windfall tax revenue to be spent recklessly, "it could mean wasting a historic opportunity." The distribution form he envisioned was not direct cash handouts but could involve youth entrepreneurship funds, basic income for rural areas, support for the arts, or education programs for the AI era. The initial market interpretation of his comments was far more heated than the language itself. Chaiwon Lee, chairman of Seoul's Life Asset Management, said, "His comments sounded controversial, especially when he initially suggested that excess corporate profits and increased tax revenues should be redistributed. Investors need clearer signals to understand how this will work, but it is not easy for the government to take action that goes against the basic principles of capitalism." Namuh Rhee, chairman of the Korea Corporate Governance Forum, said, "Investors do not like surprises and lack of visibility. Kim Yong-beom's comments are seen as hinting at anti-market policies, and investors are worried that the government may backtrack on its market and governance reforms." Homin Lee, a strategist at Lombard Odier in Singapore, pointed out that "the rapid decline in market sentiment was triggered by President's chief policy advisor Kim Yong-beom's unexpected remarks about the 'AI dividend.' As Kim Yong-beom denied that this was a windfall tax, the market sentiment showed some rebound." Christy Tan, senior investment strategist at Franklin Templeton Research Institute, said in a Bloomberg TV interview, "This is also a signal that Asian economies do want to convey a shared ownership in the digital and AI future. Currently, the proposed source of funds by South Korean officials is excess tax revenue, so residents are quite vigilant, fearing that they will ultimately foot the bill instead of the government." The Strongest Tech Cycle in History and the Vulnerability of High Concentration This bout of volatility has a special market backdrop. The Kospi closed at 7,643.15 points on May 12, with Samsung Electronics and SK Hynix accounting for 44% of the total market value of the Kospi index, with Samsung Electronics surpassing a market value of $1 trillion, becoming the second Asian company after TSMC to reach this threshold. So far this year, the Kospi has risen by about 77%, continuing the strongest annual gain since 1999 set in 2025. Meanwhile, Samsung Electronics' operating profit surged 48 times year-on-year in the first quarter, expected to surpass Apple and Alphabet to become the second most profitable tech company in the world after NVIDIA; SK Hynix is expected to reach an operating profit of 23.9 trillion Korean won by 2026. According to media reports citing Nomura's co-head of Asia Pacific equity research CW Chung, the combined profits of the two companies this year could reach 60 trillion Korean won, roughly equivalent to a quarter of South Korea's GDP. However, it is this high concentration that creates the vulnerability of the market. Yoon Joonwon, fund manager at DS Asset Management, said that the sudden decline in the Kospi indicates that "investors can feel uneasy at any time" because the market breadth is extremely narrow - Samsung and SK Hynix have absorbed most of the liquidity. Despite some Wall Street strategists still expecting the Kospi to reach 10,000 points within the year, foreign funds have already started reducing their holdings of South Korean stocks this month. From Bonuses to Strikes: Disputes over Distribution Erupting in Workshops The discussion of the "citizen dividend" did not arise out of thin air but had already taken root in reality. The Samsung Electronics union entered the final stage of government-mediated wage negotiations on Tuesday. Last month, tens of thousands of people gathered outside Samsung's main chip production base demanding a larger share of AI profits for employees. The union demanded that 15% of operating profits be distributed to chip department employees and threatened to launch an 18-day strike starting on May 21 if the negotiations failed. SK Hynix has become a reference point for this game: the company agreed last year to include 10% of annual operating profits in the performance bonus pool. Both companies are core suppliers of global AI memory chips, and the discrepancy in profit distribution formulas has become a bargaining chip for the Samsung union. Combined, Samsung and SK Hynix achieved an operating profit of around 90 trillion Korean won last year, equivalent to about 3% of South Korea's GDP. This line of controversy extends from within the companies to the top levels of policy. The Lee Jae-myung government has consistently emphasized "inclusive" growth, with policy focusing on increasing household income, regional development, and support for small and medium-sized enterprises. Kim Yong-beom's article is not an isolated personal statement but a policy signal released within the framework of the government's governance philosophy. AI Superfluous Surplus: Wealth Flow Determines Distribution Tensions Behind the distribution disputes lies a macro-level structural tension. According to a report by Goldman Sachs on May 11, South Korea's AI-related exports could reach nearly 30% of GDP by 2026, more than triple the level of less than 10% in the past five years. This is the largest tech export boom in South Korea's recorded history - compared to the 2017-18 cycle, the increase in AI-related tech exports (as a share of GDP) in South Korea in 2026 is about nine times higher. Goldman Sachs estimates that South Korea's current account surplus could exceed 10% of GDP by 2026, reaching a historical high. However, this wealth has not translated into broader liquidity diffusion within the country. The Goldman Sachs report points out that the excess surplus in South Korea has largely bypassed the domestic economy, flowing mainly into overseas equity investments, with M2 growth rates still hovering around 5%. The accumulating pressure of exchange rate appreciation due to the surplus is continuing - Goldman Sachs has revised its policy rate expectations for South Korea in 2026 from a wait-and-see stance to two 25-basis-point hikes in the second half of the year, bringing the end rate to 3.0%. From an industry structure perspective, the Goldman Sachs report highlights that while the tech sector in South Korea accounts for only about 10% of GDP, it could contribute to around 40% of the actual GDP growth rate in 2026; conversely, growth in non-tech sectors, which make up about 90% of GDP, is relatively lackluster. This "K-shaped cycle" - with highly concentrated excess profits and limited benefits to the middle class - mirrors the structural dilemma described by Kim Yong-beom's article at a macro level. Goldman Sachs suggests that fiscal policy in this K-shaped cycle should be "targeted and cautious," storing some excess tech tax revenue to counter the economy's pro-cyclicality. South Korean Stocks are Trading More than Just Performance For investors, the focus in the South Korean market is shifting from "how strong is the demand for AI" to "how are AI profits being distributed." In the short term, the results of the Samsung Electronics wage negotiations, the risk of union strikes, the bonus mechanisms at SK Hynix, and whether the President's policy team continues to clarify the boundaries of the "citizen dividend" will impact the valuation of chip stocks. In the medium term, the market will also focus on whether the AI super-surplus as mentioned by Goldman Sachs continues to flow abroad to foreign assets, or whether more of it returns to the domestic economy in South Korea. If the surplus continues to evade the domestic economy, the political and social pressures surrounding distribution may continue to rise; if it spreads more widely through wages, taxes, or investment channels, the uncertainty in policy may ease to some extent. The recent turmoil in South Korea demonstrates that the next phase of the AI market is not just about computing power, chips, and profit forecasts, but also about the ownership of excess returns. The SK Hynix bonus, Samsung strike, and "citizen dividend" are not isolated events but different aspects of the same issue: when AI enables a few companies and asset prices to benefit greatly, the market will sooner or later have to price the risk of redistribution. This article is a translation from "Wall Street News" GMTEight Editor: Feng Qiuyi.