South Korean shares rallied sharply on Wednesday, with the benchmark KOSPI surging more than 6% in early trade as heavyweight semiconductor stocks led a broad-based recovery, reflecting renewed investor appetite for artificial intelligence-related shares after last week's steep selloff, according to Reuters.The benchmark KOSPI climbed 406.60 points, or 6.03%, to 7,154.55 in early trading. The technology-focused Kosdaq index also advanced nearly 5%.The sharp rally prompted the activation of the KOSPI's "sidecar" mechanism, temporarily suspending programme trading for five minutes to help curb excessive market volatility.AI chipmakers spearhead gainsReuters reported that the gains mirrored a strong rebound in U.S. equities overnight, where the Nasdaq Composite ended higher, and the Philadelphia SE Semiconductor Index surged more than 5%, marking its strongest daily performance in five weeks.Investor attention is now turning to upcoming quarterly earnings from Alphabet, the parent company of Google, as well as major chipmakers Intel and Texas Instruments, which could provide fresh direction for global AI-related stocks.On the KOSPI, SK Hynix, the world's leading AI memory chipmaker, surged more than 9%, while rival Samsung Electronics gained 6.6%, extending advances from the previous trading session.Automakers and battery stocks advanceThe rally spread beyond semiconductor stocks, with Hyundai Motor climbing 7.64% and affiliate Kia Corp adding 2.97%.Battery manufacturer LG Energy Solution rose 3.79%, while steelmaker POSCO Holdings gained 2.5%. Biopharmaceutical company Samsung BioLogics traded little changed from its previous close.Foreign investors continue buying spreeAccording to Reuters, market breadth remained firmly positive, with 728 of the 911 traded stocks advancing, while 162 declined.Foreign investors purchased a net 1.75 trillion won (approximately $1.18 billion) worth of shares during the session. Their cumulative net purchases over the past week through Tuesday reached 2.71 trillion won, highlighting sustained overseas interest in South Korean equities.Won steadies as bond yields riseThe South Korean won traded at 1,480 per U.S. dollar on the onshore settlement platform after strengthening to as much as 1,471 per dollar in the previous session.In offshore trading, the won was quoted at 1,480.0 per dollar, up 0.1% on the day, while one-month non-deliverable forward contracts were priced at 1,478.9.In the fixed-income market, September futures on three-year Treasury bonds fell 0.09 point to 102.79.The yield on the most actively traded three-year Korean Treasury bond rose 2.8 basis points to 3.897%, while the benchmark 10-year government bond yield also increased 2.8 basis points to 4.359%, Reuters reported.