Nikkei: semiconductor talent war heats up Samsung employees'"pockets"

Samsung's strong profits are making employees of the world's largest chipmaker "pocketed" at a time when semiconductor engineers are in short supply and talent wars among major manufacturers are heating up.

Samsung Electronics paid a "service bonus" equivalent to three months' salary to all employees in its memory division in January, which played a central role in surpassing Intel in chip revenue in 2021, Nikkei Asia reported.

Just a few weeks ago, Samsung paid a special bonus equivalent to two months' salary to all its employees, plus a regular profit-linked bonus equivalent to half a year's salary, highlighting the fierce competition for talent in the industry.

Samsung employed 109490 employees in South Korea as of December 31, 2020, with an average annual salary of 127 million won ($106000), according to an annual report by the Korea Stock Exchange. That's up 26% from five years ago, and the average is likely to be higher, given strong earnings in 2021.

That figure doesn't tell the whole story, as the chipmaker offers other generous benefits. Employees can enjoy free breakfast, lunch and dinner in various canteens in the company, and most of the tuition fees for their children are borne by Samsung.

These policies are rooted in the compensation philosophy put forward by the late Lee Kun-hee, Samsung's long-time leader, in 2001: performance should be rewarded by pay. Samsung was one of the first South Korean companies to introduce a profit-sharing system for employees.

Top chipmakers are generous because of a chronic shortage of engineers. With the steady rise in global demand for semiconductors, chipmakers are competing for talent who can develop new technologies or expand manufacturing facilities.

As games and Internet companies such as Naver and Kakao become more popular, the talent pool for science and engineering majors is shrinking further. Naver's average annual salary has halved in five years, reaching nearly $86000 by 2020. Samsung, which has long topped the list of South Korea's most popular workplaces, has slipped recently.

At this point, the South Korean government has recognized that semiconductor shortage is a serious risk in a core industry, and has taken measures to train 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 offers special incentives to attract good engineers and raise pay to retain employees when Chinese competitors poach them.

In contrast to this is 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 training talents. Large electrical equipment manufacturers pulled out of the chip business more than a decade ago, and fewer and fewer researchers in academia and business are interested in the field, leading to a shortage of engineers.

Moreover, the rigid pay structure makes it difficult for Japanese companies to attract the competitive talent they need. Korea has a lot to learn from Japan.