New Delhi, June 11 -- South Korea has had the world's hottest stock market over the past year, with the Kospi Index surging 165% thanks to the country's two semiconductor powerhouses, Samsung Electronics and SK Hynix.

That's causing some problems-and could cause more if the past week's tech stock downturn continues.

Samsung and SK Hynix, along with U.S.-based Micron Technology, dominate the global market for advanced memory chips. Hyperscalers rushing to build artificial-intelligence capacity are paying virtually any price for their products. Samsung's operating profit soared more than sevenfold year over year in its latest earnings report.

"This is new territory," says Gi-Wook Shin, director of Stanford University's Korea Program. "It...