The global economy in 2026 revolves around three semiconductor giants: South Korea's Samsung Electronics and SK Hynix, and Taiwan's TSMC. While oil, automobiles, steel, and finance shaped the 20th century, the core drivers of civilization are now shifting towards artificial intelligence (AI) and semiconductors as we move toward the mid-21st century. AI is not just an industry; it is a new civilizational infrastructure that reshapes military, diplomatic, economic, educational, medical, cultural, financial, administrative, and energy systems.
At the heart of this AI civilization are GPUs (graphics processing units), HBM (high bandwidth memory), advanced foundries, and cutting-edge processes. While U.S. tech giants are developing AI platforms, the essential hardware that powers these AIs is supplied by South Korea and Taiwan. If the U.S. controls the design and operating systems of AI, South Korea and Taiwan hold the memory and production heart of this new civilization.
Today, semiconductors are the strongest pillar of the South Korean economy, with Samsung Electronics and SK Hynix at the center. Together, their market capitalizations account for about 45% of the entire South Korean stock market. This indicates not just the size of these two companies but also their deep connection to the structure of the South Korean capital market, the returns of the national pension, retirement funds, ETFs, individual investors' assets, exchange rates, exports, tax revenues, employment, and even national growth rates. Samsung Electronics is a representative national stock with approximately 5 million individual shareholders. Considering family units, a significant portion of the South Korean population is directly or indirectly linked to Samsung Electronics. SK Hynix has also emerged as a leader in HBM for the AI era, transforming from a memory company into a key player in the global AI supply chain.
Taiwan's TSMC has reached the top in a different way. TSMC is the world's strongest foundry, not a memory producer. Most advanced chips from major global AI and IT companies like NVIDIA, Apple, AMD, Broadcom, and Qualcomm rely on TSMC's production capabilities. TSMC is not just a manufacturing company; it is the central hub of the world's cutting-edge technology production system. TSMC accounts for about 35-40% of the Taiwanese stock market, and it is difficult to explain Taiwan's exports, investments, exchange rates, growth rates, and national security without referencing TSMC. Thus, the Taiwan Strait issue is not merely a territorial conflict; it is underpinned by the strategic value of TSMC, often referred to as the 'Silicon Shield.' If TSMC falters, the entire global AI industry and advanced supply chain could be at risk.
However, the true competition for dominance in AI semiconductors is not determined solely by market capitalization or technological prowess. More crucial is how profits are distributed, reinvested, how talent is retained, and how the balance between shareholders, employees, and the national economy is designed.
Recently, the controversy over performance bonuses at Samsung Electronics and SK Hynix has gained attention for this reason. In a tentative wage negotiation agreement for 2026, Samsung proposed allocating 10.5% of its operating profit for special management performance bonuses. SK Hynix also agreed to allocate 10% of its operating profit for employee performance bonuses after union pushback. Employees may justifiably demand to share in the profits when the company performs well. The semiconductor industry operates under extreme pressure, with relentless research and development and production. It is undeniable that engineers, researchers, and production workers are the core of the company's competitiveness.
The challenge lies in the nature of the semiconductor industry as a long-term investment sector. Profits earned during boom periods must be used to endure downturns and prepare for next-generation processes. Missing an investment cycle can lead to a widening technology gap, which is not easily closed. Both memory and foundry sectors require tens of trillions of won in capital investment, long-term research and development, yield assurance, and customer trust to survive. Allocating a fixed percentage of operating profit to performance bonuses may enhance short-term predictability of compensation but could weaken long-term investment capacity.
Particularly concerning is the forecast that if the AI semiconductor supercycle materializes, Samsung Electronics and SK Hynix could face performance bonus burdens in the tens of trillions of won or more. Meanwhile, competitors are currently channeling cash into investments. U.S. Micron is significantly increasing its capital expenditures this year and is constructing large production facilities, including the Clay mega-fab in New York. TSMC is also expanding its capital investments to as much as $56 billion, approximately 85 trillion won, broadening its production bases not only in Taiwan but also in the U.S. and Europe. If Samsung and SK Hynix distribute tens of trillions of won in bonuses while competitors use that money to build factories and acquire equipment for next-generation production capabilities, immediate labor peace could lead to long-term competitive weakness.
In semiconductors, investment equates to future market share. Today's cash distribution influences tomorrow's technological dominance. However, performance bonuses should not be dismissed. The key is to share performance while establishing more refined and transparent criteria. In the past, Samsung Electronics and SK Hynix based their bonuses on economic value added (EVA), but there was significant dissatisfaction with the opaque calculation methods, leading to suspicions that the companies could arbitrarily adjust variables. Consequently, employees began demanding simpler and more intuitive operating profit-based criteria. The companies share responsibility here; if compensation criteria are not transparent, employees will not trust them. However, simplicity does not always equate to a good system. Basing bonuses solely on operating profit could overlook essential factors such as investment, cash flow, shareholder returns, future competitiveness, and contributions to research and development.
Global tech giants and semiconductor companies generally reflect company performance, individual contributions, long-term stock performance, and strategic contributions in their compensation structures. TSMC has a guideline to allocate at least 1% of operating profit for performance bonuses, but the specific amount is determined by a committee of outside directors reviewing the year's performance. Last year, TSMC reportedly distributed performance bonuses totaling approximately 206.1 billion Taiwanese dollars, around 9.6 trillion won, to over 90,000 employees. This amount corresponds to about 10% of operating profit, but it is not a fixed formula; rather, it combines the board's and committee's judgments. U.S. companies also utilize not only cash bonuses but also restricted stock units, stock options, and long-term incentives. By granting shares to key talent over several years, they link employee compensation to the company's long-term stock performance. This is not merely compensation but a system that combines talent retention, shareholder value, and long-term strategy.
Samsung's decision to offer performance bonuses in the form of company stock rather than cash, with some sale restrictions, represents a significant change. SK Hynix is also operating a shareholder participation program that allows employees to receive part of their bonuses in company stock. However, this alone is not sufficient. For stock-based compensation to become a true long-term reward system, it must reflect sale restrictions, long-term performance criteria, research and development outcomes, shareholder returns, investment capacity, and cash flow. While it is desirable for employees to become owners of the company, if it weakens the company's future investment capacity, it risks becoming a short-term distribution logic rather than a genuine ownership mentality.
It is noteworthy that this controversy has expanded into discussions about shareholder loyalty obligations. Operating profit is not solely the employees' share; it encompasses the risks of shareholders' capital, taxes for the state, the ecosystem of partner companies, future investment resources, and funds for downturns. A company is a product of labor and a combination of capital, technology, and market trust. Therefore, the issue of allocating a fixed percentage of operating profit ahead of taxes, investments, dividends, and research and development cannot be resolved solely through labor-management agreements. At a minimum, transparent procedures and explanations that the board, shareholders, and market can accept are necessary. This is not an argument to neglect labor; rather, it is a necessary mechanism for sustainable performance sharing.
If Samsung Electronics and SK Hynix are the heart of the South Korean economy, that heart must not only beat strongly but also endure over time. If profits are shared during boom periods but investment capacity diminishes during downturns, the competitive edge cannot be maintained. The semiconductor industry is not one that ends with a single boom. The future battlefield will be much broader, encompassing AI servers, HBM, next-generation DRAM, NAND, foundry, packaging, glass substrates, power semiconductors, and on-device AI. What is needed now is a national strategic compensation system that transcends labor-management conflicts. A balance is required that provides fair compensation to employees, predictable returns to shareholders, sufficient investment capacity for the company, and a sustainable industrial foundation for the nation.
The United States is well aware of this structure. That is why the CHIPS Act aims to attract Samsung and TSMC to American soil. The U.S. strategy is not merely about attraction; it seeks to incorporate advanced semiconductor production capabilities into its national security framework to maintain AI dominance. China is pursuing a similar path, attempting to achieve self-sufficiency in AI chips centered around Huawei and pouring massive funds into domestic production of memory and foundry. Japan is also dreaming of reviving advanced foundry capabilities led by Rapidus and turning its strengths in materials, equipment, and precision chemicals back into strategic assets.
The U.S. is organizing alliances, China is pursuing self-sufficiency, and Japan aims to dominate the supply chain. In this vast landscape, South Korea holds two jewels: Samsung Electronics and SK Hynix. Therefore, South Korea's tasks are clear. First, it must maintain a competitive edge in HBM and next-generation memory. Second, it must continue to challenge in foundry and advanced packaging. Third, it must transparently and long-term adjust labor-management compensation systems to global standards. Fourth, it must establish governance that is acceptable to the national pension, individual shareholders, employees, and partner companies. Fifth, it must treat semiconductors not merely as an export industry but as a national security industry.
The 19th century was the era of Britain, and the 20th century was the era of the United States. The world in the mid-21st century stands before a new question: Where is the core production base of AI civilization? The answer is becoming increasingly clear.
It is Northeast Asia, where South Korea, Taiwan, Japan, and China converge. While military power remains overwhelmingly in the hands of the United States and finance is still dominated by the dollar, the key axis of AI semiconductor production is pulsing in East Asia. Samsung Electronics and SK Hynix supply the memory for AI, while TSMC produces its brain. These three companies are not just private enterprises; they are strategic assets supporting the foundation of the global digital economy.
If oil moved the 20th century, semiconductors are driving the 21st-century civilization. The heart of that semiconductor industry is now beating in South Korea and Taiwan. However, no matter how strong the heart, if it misuses its resources, the body cannot endure for long. The performance bonus controversy at Samsung Electronics and SK Hynix is thus not merely a wage issue; it is a national question about how South Korea will share, invest, and preserve the wealth generated in the AI era for future generations.
The answer does not lie on one side. There is no technology without labor, no competitive edge without investment, and no capital market without shareholder trust. Now, South Korea's semiconductor industry must answer a larger question: How to share today's achievements without losing tomorrow's dominance. This must become the new common sense of South Korea in the AI semiconductor era.
At the heart of this AI civilization are GPUs (graphics processing units), HBM (high bandwidth memory), advanced foundries, and cutting-edge processes. While U.S. tech giants are developing AI platforms, the essential hardware that powers these AIs is supplied by South Korea and Taiwan. If the U.S. controls the design and operating systems of AI, South Korea and Taiwan hold the memory and production heart of this new civilization.
Today, semiconductors are the strongest pillar of the South Korean economy, with Samsung Electronics and SK Hynix at the center. Together, their market capitalizations account for about 45% of the entire South Korean stock market. This indicates not just the size of these two companies but also their deep connection to the structure of the South Korean capital market, the returns of the national pension, retirement funds, ETFs, individual investors' assets, exchange rates, exports, tax revenues, employment, and even national growth rates. Samsung Electronics is a representative national stock with approximately 5 million individual shareholders. Considering family units, a significant portion of the South Korean population is directly or indirectly linked to Samsung Electronics. SK Hynix has also emerged as a leader in HBM for the AI era, transforming from a memory company into a key player in the global AI supply chain.
Taiwan's TSMC has reached the top in a different way. TSMC is the world's strongest foundry, not a memory producer. Most advanced chips from major global AI and IT companies like NVIDIA, Apple, AMD, Broadcom, and Qualcomm rely on TSMC's production capabilities. TSMC is not just a manufacturing company; it is the central hub of the world's cutting-edge technology production system. TSMC accounts for about 35-40% of the Taiwanese stock market, and it is difficult to explain Taiwan's exports, investments, exchange rates, growth rates, and national security without referencing TSMC. Thus, the Taiwan Strait issue is not merely a territorial conflict; it is underpinned by the strategic value of TSMC, often referred to as the 'Silicon Shield.' If TSMC falters, the entire global AI industry and advanced supply chain could be at risk.
However, the true competition for dominance in AI semiconductors is not determined solely by market capitalization or technological prowess. More crucial is how profits are distributed, reinvested, how talent is retained, and how the balance between shareholders, employees, and the national economy is designed.
Recently, the controversy over performance bonuses at Samsung Electronics and SK Hynix has gained attention for this reason. In a tentative wage negotiation agreement for 2026, Samsung proposed allocating 10.5% of its operating profit for special management performance bonuses. SK Hynix also agreed to allocate 10% of its operating profit for employee performance bonuses after union pushback. Employees may justifiably demand to share in the profits when the company performs well. The semiconductor industry operates under extreme pressure, with relentless research and development and production. It is undeniable that engineers, researchers, and production workers are the core of the company's competitiveness.
The challenge lies in the nature of the semiconductor industry as a long-term investment sector. Profits earned during boom periods must be used to endure downturns and prepare for next-generation processes. Missing an investment cycle can lead to a widening technology gap, which is not easily closed. Both memory and foundry sectors require tens of trillions of won in capital investment, long-term research and development, yield assurance, and customer trust to survive. Allocating a fixed percentage of operating profit to performance bonuses may enhance short-term predictability of compensation but could weaken long-term investment capacity.
Particularly concerning is the forecast that if the AI semiconductor supercycle materializes, Samsung Electronics and SK Hynix could face performance bonus burdens in the tens of trillions of won or more. Meanwhile, competitors are currently channeling cash into investments. U.S. Micron is significantly increasing its capital expenditures this year and is constructing large production facilities, including the Clay mega-fab in New York. TSMC is also expanding its capital investments to as much as $56 billion, approximately 85 trillion won, broadening its production bases not only in Taiwan but also in the U.S. and Europe. If Samsung and SK Hynix distribute tens of trillions of won in bonuses while competitors use that money to build factories and acquire equipment for next-generation production capabilities, immediate labor peace could lead to long-term competitive weakness.
In semiconductors, investment equates to future market share. Today's cash distribution influences tomorrow's technological dominance. However, performance bonuses should not be dismissed. The key is to share performance while establishing more refined and transparent criteria. In the past, Samsung Electronics and SK Hynix based their bonuses on economic value added (EVA), but there was significant dissatisfaction with the opaque calculation methods, leading to suspicions that the companies could arbitrarily adjust variables. Consequently, employees began demanding simpler and more intuitive operating profit-based criteria. The companies share responsibility here; if compensation criteria are not transparent, employees will not trust them. However, simplicity does not always equate to a good system. Basing bonuses solely on operating profit could overlook essential factors such as investment, cash flow, shareholder returns, future competitiveness, and contributions to research and development.
Global tech giants and semiconductor companies generally reflect company performance, individual contributions, long-term stock performance, and strategic contributions in their compensation structures. TSMC has a guideline to allocate at least 1% of operating profit for performance bonuses, but the specific amount is determined by a committee of outside directors reviewing the year's performance. Last year, TSMC reportedly distributed performance bonuses totaling approximately 206.1 billion Taiwanese dollars, around 9.6 trillion won, to over 90,000 employees. This amount corresponds to about 10% of operating profit, but it is not a fixed formula; rather, it combines the board's and committee's judgments. U.S. companies also utilize not only cash bonuses but also restricted stock units, stock options, and long-term incentives. By granting shares to key talent over several years, they link employee compensation to the company's long-term stock performance. This is not merely compensation but a system that combines talent retention, shareholder value, and long-term strategy.
Samsung's decision to offer performance bonuses in the form of company stock rather than cash, with some sale restrictions, represents a significant change. SK Hynix is also operating a shareholder participation program that allows employees to receive part of their bonuses in company stock. However, this alone is not sufficient. For stock-based compensation to become a true long-term reward system, it must reflect sale restrictions, long-term performance criteria, research and development outcomes, shareholder returns, investment capacity, and cash flow. While it is desirable for employees to become owners of the company, if it weakens the company's future investment capacity, it risks becoming a short-term distribution logic rather than a genuine ownership mentality.
It is noteworthy that this controversy has expanded into discussions about shareholder loyalty obligations. Operating profit is not solely the employees' share; it encompasses the risks of shareholders' capital, taxes for the state, the ecosystem of partner companies, future investment resources, and funds for downturns. A company is a product of labor and a combination of capital, technology, and market trust. Therefore, the issue of allocating a fixed percentage of operating profit ahead of taxes, investments, dividends, and research and development cannot be resolved solely through labor-management agreements. At a minimum, transparent procedures and explanations that the board, shareholders, and market can accept are necessary. This is not an argument to neglect labor; rather, it is a necessary mechanism for sustainable performance sharing.
If Samsung Electronics and SK Hynix are the heart of the South Korean economy, that heart must not only beat strongly but also endure over time. If profits are shared during boom periods but investment capacity diminishes during downturns, the competitive edge cannot be maintained. The semiconductor industry is not one that ends with a single boom. The future battlefield will be much broader, encompassing AI servers, HBM, next-generation DRAM, NAND, foundry, packaging, glass substrates, power semiconductors, and on-device AI. What is needed now is a national strategic compensation system that transcends labor-management conflicts. A balance is required that provides fair compensation to employees, predictable returns to shareholders, sufficient investment capacity for the company, and a sustainable industrial foundation for the nation.
The United States is well aware of this structure. That is why the CHIPS Act aims to attract Samsung and TSMC to American soil. The U.S. strategy is not merely about attraction; it seeks to incorporate advanced semiconductor production capabilities into its national security framework to maintain AI dominance. China is pursuing a similar path, attempting to achieve self-sufficiency in AI chips centered around Huawei and pouring massive funds into domestic production of memory and foundry. Japan is also dreaming of reviving advanced foundry capabilities led by Rapidus and turning its strengths in materials, equipment, and precision chemicals back into strategic assets.
The U.S. is organizing alliances, China is pursuing self-sufficiency, and Japan aims to dominate the supply chain. In this vast landscape, South Korea holds two jewels: Samsung Electronics and SK Hynix. Therefore, South Korea's tasks are clear. First, it must maintain a competitive edge in HBM and next-generation memory. Second, it must continue to challenge in foundry and advanced packaging. Third, it must transparently and long-term adjust labor-management compensation systems to global standards. Fourth, it must establish governance that is acceptable to the national pension, individual shareholders, employees, and partner companies. Fifth, it must treat semiconductors not merely as an export industry but as a national security industry.
The 19th century was the era of Britain, and the 20th century was the era of the United States. The world in the mid-21st century stands before a new question: Where is the core production base of AI civilization? The answer is becoming increasingly clear.
It is Northeast Asia, where South Korea, Taiwan, Japan, and China converge. While military power remains overwhelmingly in the hands of the United States and finance is still dominated by the dollar, the key axis of AI semiconductor production is pulsing in East Asia. Samsung Electronics and SK Hynix supply the memory for AI, while TSMC produces its brain. These three companies are not just private enterprises; they are strategic assets supporting the foundation of the global digital economy.
If oil moved the 20th century, semiconductors are driving the 21st-century civilization. The heart of that semiconductor industry is now beating in South Korea and Taiwan. However, no matter how strong the heart, if it misuses its resources, the body cannot endure for long. The performance bonus controversy at Samsung Electronics and SK Hynix is thus not merely a wage issue; it is a national question about how South Korea will share, invest, and preserve the wealth generated in the AI era for future generations.
The answer does not lie on one side. There is no technology without labor, no competitive edge without investment, and no capital market without shareholder trust. Now, South Korea's semiconductor industry must answer a larger question: How to share today's achievements without losing tomorrow's dominance. This must become the new common sense of South Korea in the AI semiconductor era.
* This article has been translated by AI.
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