AI chip workers demanding more as company profits soar

Chipmakers are seeing an ‘unprecedented wave of insatiable demand’ for advanced memory chips, says a semiconductor research firm. Courtesy pic

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Runaway profits and sky-high valuations for microchip companies have fuelled worker demands over pay packages in South Korea, raising the question: who profits from the artificial intelligence (AI) boom?

In the United States, some employees with stock options have made it rich and retired early, while in Asia, chip engineers are now using their “immense” leverage over companies to get their way, say analysts.

After memory chip giant Samsung Electronics reached a deal with its biggest union over bonuses, averting a major strike, AFP looks at what the dispute might mean for the industry.

Rapid advances in AI systems since the 2022 breakthrough of the text generator ChatGPT have sparked a gold rush among tech companies.

Massive demand for the silicon components used in AI data centres — especially memory chips, which are in short supply — has sent revenues soaring for firms that design, produce and assemble them.

Samsung’s value topped $1 trillion this month, followed by South Korean rival SK Hynix and US chipmaker Micron — newcomers to a previously exclusive club of around a dozen companies, nearly all American.

“An unprecedented wave of insatiable demand” for advanced memory chips has made SK Hynix and its peers “an indispensable backbone of the global AI infrastructure build-out”, said William Keating, head of semiconductor research firm Ingenuity.

In the US, employees often get stock options, a form of so-called “golden handcuffs” allowing workers to profit from share price gains over a set period of time.

Asia’s huge chip sector “is more dominated by labour unions”, said Neil Shah, co-founder of Counterpoint Research.

With Taiwan and South Korea home to most of the world’s chipmaking talent pool, engineers there hold “immense” leverage, said Shah.

“This skilled labour force know they are indispensable, they are contributing to these larger margins,” he added.

Under the union deal, about 60% of Samsung’s domestic workforce is eligible to receive a bonus of roughly $370,000 this year, based on a market estimate of operating profit.

Workers at SK Hynix received bonuses more than three times larger than those paid by Samsung last year, according to Samsung’s union.

A Samsung strike “would almost certainly have been the biggest work stoppage in the history of the global semiconductor industry”, said South Korean researcher Kap Seol in an article for US magazine Jacobin.

In the chip world, “high pay and generous benefits often foster a sense of privilege and prestige” among workers, “despite their experience of chemically drenched working conditions, cutthroat competition and long, risky working hours”, he wrote.

There have also been reports of discontent over bonuses at Taiwan’s chip production giant TSMC, where AI demand has brought record profits.

“As the company continues to grow, we are highly confident that the full-year growth percentage of our employee profit-sharing… will surpass that of last year,” said TSMC in a statement.

TSMC boss CC Wei held a meeting recently to explain the bonus situation to staff. The atmosphere was “calm and friendly”, said a company spokesperson, adding that annual bonuses were set to grow “more than 30%” year-on-year.

The Samsung agreement is fuelling labour demands in other sectors across South Korea — with workers in industries from biotech and autos to shipbuilding asking for a larger share of corporate profits through bonuses.

According to Shah, in general terms, company shareholders reap the most from booming profits, followed by senior company executives and then employees with stock options.

Fourth are the chip engineers, some of whom are now demanding a greater share of the pie.

In the case of Californian AI chip titan Nvidia — the world’s most valuable company at more than $5 trillion — many employees with stock options became millionaires very quickly, said Shah.

“Many of them actually left and became investors” or simply chose to retire “on the beach”.

-Khmer Times-