South Korean stocks declined sharply on Tuesday following remarks from a senior government official about directing AI-related tax revenue to citizens, sparking renewed focus on how to distribute the financial benefits of rapid advances in artificial intelligence technology.
The Kospi index, which has seen a near 80% gain this year, closed 2.29% lower at 7,643.15, reflecting investor concern and volatility, with leading technology firms Samsung Electronics and SK Hynix also losing ground, finishing the session down by 2.28% and 2.39% respectively.
The volatility was triggered after presidential policy chief Kim Yong-beom outlined the possibility of using additional tax revenue from the AI boom to fund a dividend to citizens. Investors initially interpreted the comments as signaling a potential new tax on corporate profits from key AI players, prompting a broad selloff that drove the index down by as much as 5.1% before losses moderated.
Meanwhile, Kim later clarified that the intention was to use “excess tax revenue” already generated by the surge in AI activity, rather than impose a direct windfall tax on firms.
The remarks come amid broader debate in South Korea over how to equitably distribute the gains from AI-driven growth, especially as chipmakers have posted substantial profits. There are mounting calls for large technology firms to share a greater proportion of these gains with employees and the wider public.
Recent demonstrations in the country have brought this issue to the fore, with tens of thousands gathering outside major chip manufacturing facilities to press for higher compensation linked to the AI boom.
Labour tensions at Samsung are elevated, with government-mediated wage negotiations entering a pivotal stage as the company seeks to avoid a strike that could affect its chip production. The union representing its workers is pushing for 15% of operating profit to be allocated to chip division staff, looking at SK Hynix’s recent move to dedicate 10% of its annual operating profit for performance bonuses as a precedent. The union has threatened to begin an 18-day strike on May 21 if its demands are not met.
