A quarter-century after Wall Street coined "e-merging markets" during the dot-com boom, South Korea and Taiwan are again capturing investor attention through the AI revolution. These two nations generated three-quarters of all emerging market returns over the past year, with gains concentrated in just three semiconductor producers—TSMC, Hynix, and Samsung.

America's big tech companies are on track to spend $700bn in AI capital expenditures this year, and that spending is flowing directly to north Asian chipmakers. Samsung's operating profit is expected to surge more than sixfold to around $185bn this year, surpassing every Mag Seven company except Nvidia. Together, the three giants are tracking profits exceeding those of Apple, Amazon and Alphabet combined.

The concentration is striking. TSMC now accounts for a record 13% of the MSCI emerging markets index—larger than all Indian stocks combined—and sits in 92% of global equity funds. Historical patterns suggest danger: when a sector outperforms its index by more than 150% over two years, sharp corrections typically follow. The semiconductor sector has beaten the MSCI index by over 180%.

Both nations have evolved into developed economies with per capita incomes exceeding $35,000, yet they remain classified as emerging markets. Taiwan is expected to grow nearly 7% this year while South Korea clocks around 2%. When the AI arms race cools, the spotlight will fade—but for now, the e-merging markets are having their moment.