The South Korean KOSPI index has experienced historic volatility tied to the AI chip cycle, with over half the market concentrated in Samsung Electronics and SK Hynix. On July 28, 2026, the KOSPI recorded its largest one-day drop in history, falling 10.84% and triggering circuit breakers, followed by a sharp rebound on July 31, 2026, surging 17.9%. Samsung Electronics and SK Hynix together account for more than 50% of the index's total market value, and as central suppliers of memory chips for AI data centers, global sentiment shifts in AI infrastructure spending directly impact their stock prices and the entire index. Heavy use of single-stock leveraged ETFs has amplified swings, prompting South Korean financial authorities to implement stricter regulations, including higher minimum cash deposit requirements. The VKOSPI, a volatility measure, dropped by roughly 19% by early August as new rules influenced trading. The concept of "AI sovereignty" is shaping long-term strategy, with governments globally rushing to secure AI infrastructure, leading to massive capital spending and a potential oversupply of AI components, which could pressure future profit margins if demand from hyperscale cloud providers slows. Investors are monitoring the sustainability of global AI capital expenditure, the effectiveness of new regulatory constraints on leveraged trading, and whether volatility leads to more cautious retail participation or continued reliance on semiconductor giants.