At a time when there is a chronic shortage of semiconductor engineers and the talent war among major manufacturers heats up, Samsung Electronics’ strong earnings are making the employees of the world’s largest chipmaker “pocketed”.
According to Nikkei Asia, Samsung Electronics January issued a “service bonus” equivalent to three months’ wages to all employees in its memory division, which plays a central role in surpassing Intel’s chip revenue in 2021.
Just a few weeks ago, Samsung also handed out a special bonus equal to two months’ salary to all employees, plus a regular profit-linked bonus equal to half a year’s salary, underscoring the fierce competition for talent in the industry.
Samsung employed 109,490 people in South Korea with an average annual salary of 127 million won ($106,000) as of December 31, 2020, according to an annual report from the Korea Securities and Futures Exchange. That number is up 26% from five years ago, and the average is likely to be higher given strong earnings in 2021.
That number doesn’t tell the whole story, as the chipmaker also offers other generous perks. Employees can enjoy free breakfast, lunch, and dinner in various cafeterias in the company, and most of the children’s tuition is borne by Samsung.
The policies are rooted in a salary philosophy laid out in 2001 by Samsung’s longtime leader, the late Lee Kun-hee: that performance should be rewarded through compensation. Samsung was one of the first Korean companies to introduce a system for employees to share company profits.
The generosity of the top chip makers is due to a chronic shortage of engineers. As global semiconductor demand steadily rises, chipmakers are vying for talent who can develop new technologies or expand manufacturing facilities.
With the growing popularity of game and internet companies such as Naver and Kakao, the talent pool for science and engineering majors is shrinking further. Naver’s average annual salary has halved in five years, to nearly $86,000 in 2020. And Samsung, which has long been the most popular place to work in South Korea, has slipped recently.
At this point in time, the Korean government has recognized that the semiconductor shortage is a serious risk in a core industry, and has taken steps to foster the development of more talents, such as encouraging leading universities to set up semiconductor courses. But efforts to train more qualified workers have failed to keep up with the rapid growth of the chip market.
Samsung is offering special incentives to attract top engineers and boosting pay in a bid to keep employees as Chinese rivals poach them.
Contrast this with Japan. Although the Ministry of Economy, Trade and Industry is committed to revitalizing the semiconductor industry, it has not yet formulated a long-term strategy for cultivating talents. Large electrical equipment makers pulled out of the chip business more than a decade ago, and fewer researchers in academia and business are interested in the field, leading to a shortage of engineers.
Moreover, rigid compensation structures are not conducive to Japanese companies attracting the competitive talent they need. Korea has a lot to learn from Japan.