South Korean shares closed higher on Friday after U.S. President Donald Trump said an agreement to end the war with Iran was possible, backing off from planned strikes.

Trump had previously threatened a strong response against the Middle Eastern country, but later said that negotiations had made substantial progress. However, Iranian Foreign Ministry spokesman Esmail Baghaei dismissed reports of an agreement as "speculative" and clarified that nothing had yet been finalized.

The benchmark Korea Composite Stock Price Index, or Kospi, rose 4.6%, or 359.67 points, to close at 8,123.62. The Kosdaq also increased by 3.2%, or 32.12 points, to end the day at 1,029.05.

In corporate news, Samsung Electronics (KRX:005930) is currently in discussions with Alphabet's Google to manufacture a part of its ​next-generation artificial intelligence (AI) processor, Reuters reported Thursday, citing people familiar with the matter.

Google plans to have Taiwan Semiconductor Manufacturing Company (TPE:2330) manufacture the primary compute chip for its next-generation tensor processing unit, called Icefish, while Samsung Electronics may manufacture a memory interface component using its 2-nanometer process technology.

Icefish is being developed in collaboration with MediaTek at present, with mass production possibly commencing in 2028.

Shares of Samsung Electronics jumped nearly 8% at market close, while those of TSMC added nearly 3%.