Home > Business > Industry

With Nvidia and TSMC on the offensive, how can Samsung attract engineers?

Published: 26 Aug. 2025, 07:00 Updated: 01 Sep. 2025, 18:41

LEE JAE-LIM
[email protected]

Samsung Electronics' Seocho headquarters on July 28 [YONHAP]

[CHIP REPORT ①]

Korea’s semiconductor industry is undergoing a dramatic shake-up, fueled by the explosive rise of generative AI. Market leaders are losing ground, while once-overlooked underdogs are gaining momentum. This Chip Report series unpacks the forces driving this shift — and explores how the industry’s new hierarchy is likely to take shape in the years ahead. — Ed.

Performance bonuses and labor policies at Korea’s leading chipmakers, Samsung Electronics and SK hynix, are drawing renewed attention as global competition for semiconductor talent intensifies. While global peers such as Nvidia and TSMC rely heavily on equity-based incentives to retain employees, Korean companies are facing their own set of challenges in balancing pay, retention, and work-life balance.

Nvidia’s attrition is famously low — about 2.5 percent, compared with the semiconductor industry average of 16 percent. The company has achieved this despite a punishing work culture, thanks to strong job security and stock-based rewards such as Restricted Stock Units (RSUs). Many engineers remain simply to unlock their next round of stock grants.

TSMC, the world’s largest foundry, has taken a similar approach. It offers large-scale performance bonuses and restricted stock awards (RSAs), granting stock upfront but tying ownership to long-term performance. In 2023, its total employee compensation topped 6.6 trillion won ($4.8 billion), averaging 86 million won per worker — a system credited with retaining top engineers in Taiwan’s highly competitive chip market.

In Korea, by contrast, performance-related pay has become the defining feature of semiconductor corporate culture. But rather than stock-heavy systems, it is cash bonuses tied to short-term profits that dominate — sometimes even influencing job-hunting strategies among young engineers.

Performance bonus wars: A tale of two giants
Performance bonuses at Samsung and SK hynix are a perennial talking point, shaping even career choices. One newlywed couple with engineering degrees deliberately split paths — the husband at Samsung, the wife at SK hynix — as a way of hedging against fluctuations in annual payouts.

At SK hynix, bonuses are structured around two pillars: performance sharing and productivity incentives. Performance sharing is funded by 10 percent of the previous year’s operating profit, while performance incentives can reach up to 150 percent of monthly base salary depending on business achievements.

SK Group Chairman Chey Tae-won, center, takes questions from employees during the closing session of the Icheon Forum 2025 at SK’s Seorin building in central Seoul on Aug. 20. [SK]

In 2023, SK hynix recorded its largest-ever operating profit of 23.5 trillion won, which triggered the maximum productivity incentive payout of 150 percent in both halves of the year and a performance-sharing plan that initially set the bar at 1,000 percent. After union resistance, the company agreed to add another 500 percent as a special bonus — the equivalent of about 75 percent of an average annual salary — and distributed company stock to all employees.

Still, disputes continue. In ongoing wage negotiations this year, management has proposed raising the performance-sharing cap to 1,700 percent of base pay, with half of any remaining funds diverted into savings and pensions. The union, however, insists that the entire 10 percent of operating profit set aside for profit-sharing should be distributed directly to employees. With analysts projecting record profit again this year, the battle over how to divide the spoils is only likely to intensify.

For example, based on the market forecast of 37 trillion won in annual operating profit for 2025, the union argues that the entire 10 percent — 3.7 trillion won — should be distributed. Management, by contrast, says it will first apply a 1,700 percent multiplier to the base salary and allocate about 2.5 trillion won, then split the remaining 1.2 trillion won — half to employees and half for future investment.

Management expressed a willingness to reconsider the criteria and format it had proposed, but the union stuck to its original position and declared the talks broken down.

Regarding the dispute, SK Group Chairman Chey Tae-won advised employees to look beyond short-term benefits such as bonuses at the conglomerate’s annual corporate event on Thursday, framing it as a “shortsighted approach.”

“I heard that people are not satisfied even with a 1,700 percent bonus. But even if it rises to 3,000 percent or 5,000 percent, it will not bring happiness,” he said.

Samsung’s system works differently. The company uses a mix of target achievement incentives, paid semiannually at up to 100 percent of monthly salary, and over-profit incentives, paid annually at up to 50 percent of base salary when divisional targets are exceeded.

For years, employees in Samsung’s semiconductor business received the maximum payouts. But since the memory downturn in late 2022, the incentives have shrunk dramatically. The foundry and chip design units posted losses in 2023, bringing their target achievement incentives to zero for the first time, and over-profit incentives fell from 50 percent in 2021 to nothing in 2023 before a modest recovery last year.

The two chipmakers may diverge on bonus payouts, but both are shifting toward stock-based compensation, adopting a philosophy akin to those of Nvidia and TSMC, where rewards grow with share prices.

Samsung this year began paying short- and long-term performance incentives in company stock rather than cash, a move CFO Park Soon-cheol said was meant to “reinforce responsible management and accountability.”

SK hynix introduced a shareholder participation program in 2023, allowing staff to convert 10–50 percent of their bonuses into company shares. Those who hold them for more than a year receive an additional 15 percent cash reward. This year, 60 percent of its employees opted for stock.

Critics argue that stock pay has limited retention power in Korea, where lifetime employment at big firms is common, and employees generally prefer cash.

“Domestic work forces have a strong preference for cash, so stock-based rewards could even trigger backlash,” said Yang Hee-dong, a business professor at Ewha Womans University and president of the Korean Academic Society of Business Administration. “That said, because equity-linked compensation is familiar to foreign professionals, Korean firms should leverage it in competing for global talent.”

Diverging approaches to work hours
Differences also show up in the debate regarding Korea’s 52-hour workweek. At a political forum earlier this year, comments referencing SK hynix’s stance suggested that the company did not require exemptions from the rule, even while achieving record profit. Samsung, by contrast, has argued that restrictions on work hours limit its competitiveness — particularly in the foundry business, where custom chip production for diverse clients requires longer and more variable research and development cycles than memory production.

Materials and equipment suppliers voice similar frustrations, noting that critical materials research often demands experiments extending beyond the legal workday. In practice, companies are forced to delay tests until the following morning, slowing down development.

This contrasts with Nvidia and TSMC, which both face reputations for long hours but compensate with job security and lucrative stock-based rewards. In Silicon Valley, work-life balance often bends beneath the weight of equity grants; in Taiwan, RSA plans have created legions of “semiconductor millionaires.” Korean firms, however, remain more cash-driven — meaning employee patience with long hours is shorter, and bonus disputes are sharper.

Searching for solutions: Beyond sweat and hours
The debate over bonuses and labor hours underscores a larger challenge for Korea’s semiconductor sector: how to sustain global leadership while adapting to changing work force expectations. Younger engineers increasingly prioritize work-life balance above rapid promotion, echoing cultural shifts seen in other advanced economies.

Experts suggest that the only durable solution is structural efficiency. Semiconductor companies are experimenting with artificial intelligence (AI) for process optimization and digital twin simulations to reduce the need for around-the-clock labor. For example, SK hynix has introduced AI-based virtual metrology to predict process outcomes without physically measuring every wafer, improving both speed and yield. Startups and suppliers are also developing advanced inspection and defect-detection tools, though widespread adoption remains slow due to the industry’s conservative approach to equipment changes.

“The industry must view shrinking manpower as a constant and invest more aggressively in automation and efficiency,” said Kwon Seok-joon, a chemical engineering professor at Sungkyunkwan University.

For instance, SK hynix is widening the use of Gauss Labs’ AI-based virtual metrology solution, extending it to etching processes after an initial rollout in thin-film deposition. Metrology — the measurement of whether semiconductor devices meet design specifications at each process stage — is one of the most critical steps in chipmaking. By predicting results through AI rather than physically inspecting every product, manufacturers can shorten process times. Gauss Labs reported last year that its deployment in SK hynix’s mass production fabs cut quality variability by 29 percent and improved yields.

In the United States, semiconductor measurement firm Fractilia is focusing on the yield losses caused by EUV lithography. A prime challenge is the occurrence of random atomic-level errors, known as stochastic errors.

Fractilia CEO Edward Charrier told the JoongAng Ilbo that semiconductor companies worldwide are losing revenue as advanced process ramp-ups fall behind schedule, stressing that eliminating stochastic defects is critical since EUV tools underpin decision-making in cutting-edge fabs.

An official demonstrates a wafer inspection device on display at Semicon Korea 2025 On Feb. 19 at Southern Seoul's Coex on Feb. 19. [NEWS1]

The pace of field adoption, however, remains slow due to the industry’s conservative approach to new technology. Startups such as Ohlabs and PIE, both spun out of Pukyong National University, have developed a defect detection system using medical ultrasound technology combined with AI that can reduce wafer inspection time by a factor of up to 30. But despite promising results, the firms have yet to secure major customers. Samsung Electronics and SK hynix are currently conducting sample tests.

“Since fabs put process stability and yield assurance above all else, they are often reluctant to replace equipment or bring in new systems,” said Oh Jung-hwan, CEO of Ohlabs and professor of biomedical engineering at Pukyong National University. “Even when technology is proven, the barriers to actual supply and mass production adoption remain high.”

Lee Jong-hwan, professor of system semiconductor engineering at Sangmyung University, emphasized that broader access to test environments is key to building trust in such solutions.

“For companies developing semiconductor AI tools to prove reliability, public fabs and other venues for testing and data collection need to be more widely activated,” he said.

BY LEE GA-RAM, YI WOO-LIM, PARK HAE-LEE, SHIM SEO-HYUN [[email protected]]