Chip manufacturers on high alert, reflecting on excessive industry chain dependency; the "NVIDIA incident" causes anxiety in South Korea's AI industry

"As Nvidia launches an investigation into Jensen Huang, Korean chip makers are on high alert and preparing for possible impacts." The Korea JoongAng Daily reported on the 10th that Nvidia CEO Jensen Huang’s alleged extramarital affair has caused "ripples of uncertainty" in South Korea’s semiconductor industry. Potential changes in Nvidia’s leadership could have far-reaching effects on Korean chip manufacturers and the broader AI industry ecosystem. In recent years, Nvidia’s collaboration with Korean companies has expanded beyond memory chips into critical fields such as AI data centers, robotics, and autonomous driving. Although there have been no project suspensions or supply disruptions yet, Korean media worries that, should the investigation drag on and slow Nvidia’s investment and business decisions, deeply tied Korean firms may suffer chain reactions. This sudden incident has also exposed the deep-rooted risk of Korea’s AI industry being highly dependent on a single corporate giant.

More Uncertainty in Korea’s Semiconductor Market

According to Yonhap News Agency, the US Congress has requested Jensen Huang to attend a closed-door briefing on the 18th to explain the situation. In recent days, the event has continued to trigger stock market volatility. Nvidia’s stock price fell 4.27% on the 9th and another 5.47% on the 10th, plunging two days in a row with the company’s market value shrinking by about $400 billion. All seven Korean exchange-traded open-ended index funds containing Nvidia in their names fell on the 9th, with the largest decline nearly 2%. News1 reported that this turmoil has cast yet another shadow over South Korea's semiconductor stocks, which had just experienced a heavy plunge. Earlier, fears that the US might intensify AI regulation after the midterm elections led Samsung Electronics and SK Hynix to fall for four consecutive days. Although Korean semiconductor stocks rebounded on the 11th, market confidence remains fragile after recent foreign sell-offs.

Korean securities industry insiders are even more worried that the "Nvidia incident" may trigger another round of export controls on semiconductors. Park Se-yeon, an analyst at Hanwha Investment & Securities, noted that what truly impacts Korea’s supply chain is not executives’ private lives, but potential new US export restrictions and changes in Nvidia’s customers or contracts. Both Samsung Electronics and SK Hynix have production bases in China, and their equipment imports and production line upgrades are already constrained by US export licensing policies. If the US tightens related regulations further, the operational burden on Korean firms will likely worsen.

The Hankyoreh pointed out that Nvidia has long relied on Jensen Huang’s personal leadership. If Huang steps down, Nvidia’s major business decisions and long-term partnerships with Korean companies could be affected. Nvidia is a major client for SK Hynix, while Samsung Electronics is supplying its latest high-bandwidth memory (HBM) and negotiating further product deliveries. JoongAng Daily stated that in June this year, SK Hynix signed a multi-year technology agreement with Nvidia to jointly develop memory for next-generation AI chips. Korean financial media EBN said that since HBM development and validation must be tailored to customer’s AI chips, it is difficult to quickly redirect already produced products to other firms. If Nvidia adjusts its procurement or product development plans, Korean companies' production arrangements may also be disrupted.

According to an analysis by Seoul Economic Daily, the "Nvidia incident" may offer competitors such as AMD and Google opportunities to expand their market share, while Korean memory chip companies could face new business pressures. Samsung Electronics is actively seeking to expand its client base to include AMD and Broadcom, but SK Hynix, which relies heavily on Nvidia’s memory chip orders, faces revenue risks. NH Investment & Securities researcher Ryu Yong-ho believes that a prolonged investigation could slow Nvidia’s investment decisions, delay product shipments and new releases, and ripple across Korea’s entire semiconductor industry.

AI Infrastructure Construction Also Impacted

Nvidia’s business risks not only affect Korean semiconductor orders but may also spill over into AI infrastructure construction and other partnerships. According to Yonhap News Agency, Nvidia completed its investment in Korea’s internet giant NAVER on the 6th, acquiring a 4.13% stake and becoming its third-largest shareholder. The two sides, together with other partners, are jointly advancing a $9 billion AI computing infrastructure project. If Nvidia adjusts its chip delivery schedules or supply volumes, there are risks that NAVER’s data center could face commissioning delays and shrinkage in computing power supply. Nvidia’s activities in Korea have also seen changes. Nvidia Senior Director Miranda Huang (Jensen Huang’s eldest daughter), who was scheduled to attend “AI Day Seoul,” suddenly canceled her visit to Korea, including meetings with Korean senior officials.

However, Nvidia still announced several cooperation updates with Korean partners during its Seoul activities, and Samsung Electronics, SK Hynix, Hyundai Motor, and LG Electronics have all adopted Nvidia technology in semiconductor manufacturing, robotics development, and other areas. Yonhap News Agency reported that no sign of project interruption has yet been observed. Previously, President Lee Jae-myung stated his hope to make Korea a global leader in AI. In 2025, Nvidia, the Korean government, and four Korean companies finalized a contract for about 260,000 GPUs to support Korea’s AI infrastructure construction. The government currently assesses that the planned GPU supply will not be immediately impacted.

“The Consequences for Korean Companies Could Be Devastating”

The Hankyoreh editorialized that this incident exposes Korea’s high reliance on Nvidia in its AI industry. According to cooperation plans announced by the Korean government and major enterprises in October last year, Nvidia is now deeply embedded in the country’s AI supply chain, from semiconductor manufacturing to cloud computing, making the risk of one company’s business issues potentially spill over into multiple sectors in Korea.

Jeong Hyung-geun, a researcher at Korea Institute for International Economic Policy, told Korea JoongAng Daily that the real risk for the Korean semiconductor industry is increasing reliance on a single company and its ecosystem. Korean media call for the government and firms to review GPU purchase contracts and supply schedules, accelerate partner diversification, and break from over-reliance on Nvidia. “If Nvidia’s reputation suffers and the semiconductor market contracts, the consequences for Korean companies could be devastating,” said Professor Lee Jong-hwan from Sungmyung University’s Department of System Semiconductor Engineering.