South Korean authorities are weighing measures to control leveraged single-stock exchange-traded funds tracking Samsung Electronics and SK Hynix, two of the world's largest semiconductor makers. These specialized ETFs have gained traction amid surging demand for AI-related investments, reflecting concerns about concentrated risk in a rapidly expanding asset class.

The popularity surge stems from the AI boom, which has driven explosive growth in chip demand. Investors seeking leveraged exposure to South Korea's semiconductor dominance have flooded these niche funds, creating potential systemic risks if either company faces a significant downturn.

Regulators are particularly focused on how these leveraged products might amplify market volatility. A sharp decline in Samsung or SK Hynix could trigger cascading losses across the ETF structure, potentially straining broader market infrastructure and raising questions about investor protection.

The regulatory review signals growing scrutiny of concentrated ETF exposures during the AI-driven rally. Officials are weighing intervention options as this specialized corner of the market attracts unprecedented attention.