The explosive growth of the artificial intelligence (AI) market is shaking up the global semiconductor landscape, with the performance and bonuses for employees at corporations starkly divided. While Taiwan's TSMC, the world's largest foundry (semiconductor contract manufacturing) company, is throwing a record-sized bonus event, Samsung Electronics' institutional sector has seen a significant reduction in bonuses this first half due to poor performance. As high rewards in the AI competition become a key strategy for securing top talent and maintaining technological advantages, the size of bonuses is being analyzed as a barometer of a corporation's competitiveness.
◇ TSMC with 'record-breaking performance,' rewards also unprecedented
According to industry sources, TSMC issued annual bonuses based on last year's performance earlier this month. The total amount of employee compensation approved by the board of directors reached 140.59 billion New Taiwan Dollars (approximately 6.62 trillion won), marking a more than 40% surge from the previous year and setting a record high. Based on TSMC's employee count of over 77,000, this translates to an average individual payout of over 1.8 million New Taiwan Dollars (around 85 million won). Taiwanese media estimate that for engineers with six years or more of experience, the total payout, including salary and bonuses, could reach 5 million New Taiwan Dollars (about 235 million won).
The record high performance driven by demand for AI has resulted in substantial bonuses. TSMC counts major AI chip companies like NVIDIA, Apple, AMD, and Broadcom among its clients. Last year's revenue reached 2.89 trillion New Taiwan Dollars (approximately 136 trillion won), a 34% increase from the previous year, while net profit soared by 40% to 1.17 trillion New Taiwan Dollars (approximately 55 trillion won). The U.S. investment bank Needham & Company forecasts that TSMC's AI-related revenue will skyrocket from $26 billion (about 35.4 trillion won) this year to $90 billion (approximately 122.6 trillion won) by 2029.
Wey Zhou, TSMC's chairman, has introduced a system that rewards employees based on their contributions, stating that bonuses will be paid to former employees if they contributed to the company's success, keeping the turnover rate at an all-time low.
◇ The fortunes of Samsung Electronics and SK hynix diverge
While TSMC is enjoying a bonus bonanza, the employees of Samsung Electronics, the world's second-largest foundry, have faced contrasting fortunes. According to a notice posted on Samsung Electronics' internal network on the 4th, the foundry division will not receive any Target Achievement Incentive (TAI) bonuses this first half. TAI is an incentive program that pays up to 100% of the monthly base salary based on the semi-annual performance of the respective division. Following a string of losses due to sluggish orders, Samsung's foundry division has been notified of a second consecutive 0% bonus for the second half of 2023.
The situation for Samsung Electronics' memory division is slightly better than that of the foundry, but this first half's TAI payout rate was also significantly below the maximum at just 25%. The loss of leadership in HBM (high bandwidth memory), a crucial component for AI semiconductors, to competitor SK hynix has had a substantial impact. SK hynix was able to supply HBM3E (5th generation) in bulk to major AI chip customer NVIDIA, securing the top position in the global DRAM market in the first quarter, while Samsung Electronics has fallen behind, failing to meet expectations.
After achieving record-breaking performance last year with the support of HBM, SK hynix is widening the gap in bonuses with Samsung Electronics' memory division. Based on last year's annual performance, bonuses issued at the beginning of this year reveal that employees in Samsung Electronics' semiconductor division received 14% of their annual salary, while SK hynix's bonuses reached a historic high of 1500% of the base salary. For an annual salary of 100 million won, this means receiving 75 million won as a bonus.
As the compensation system directly ties to talent acquisition competitiveness, semiconductor corporations are introducing incentive improvements to prevent talent loss. SK hynix recently proposed to raise the maximum bonus payout criteria from the existing 1000% to 1700% in response to demands from labor unions, taking measures to retain talent. In contrast, as the compensation tied to performance decreases, Samsung Electronics is putting effort into uplifting employee morale through alternative means. Earlier this year, it provided a 'crisis overcoming bonus' of 2 million won to all semiconductor divisions and recently granted more than 30 shares of company stock to employees on a differential basis.