South Korea Debates Distribution of Semiconductor Super-Cycle Profits

South Korea finds itself at a pivotal moment, navigating the complexities of an unprecedented semiconductor super-cycle. The nation's leading companies, Samsung Electronics and SK Hynix, are generating staggering operating profits, projected to reach nearly 500 trillion won this year and potentially exceed 700 trillion won next year. This windfall presents a critical question: how should these "excess profits" be distributed and leveraged for the nation's future?

“

The labor and management should promptly engage in sincere dialogue.

The current debate is largely centered on profit-sharing mechanisms, ignited by SK Hynix's decision to distribute 10% of its operating profit as performance-based pay and abolish caps. This has spurred Samsung Electronics' unions to demand that 15% of operating profits be allocated to performance-based pay without limits. While this labor-management dispute is a significant focal point, it risks overshadowing a broader societal discussion about the origins and allocation of these semiconductor profits.

It is crucial to recognize that the current success is not solely the product of corporate or labor efforts. It is the culmination of decades of strategic national policy, significant government investment in research and development, infrastructure support, and the collective efforts of workers who rapidly absorbed and innovated upon foreign technologies. Furthermore, in the current geopolitical climate, where economic security is paramount, the government's role in protecting and fostering the semiconductor industry through measures like the K-Chips Act—offering substantial tax credits for facility investments—cannot be understated. These benefits, which have seen tax-deductible rates for large corporations' facility investments skyrocket from 3% to 20% in just four years, alongside generous R&D tax credits, highlight the state's deep involvement.

“

We will continue discussions with an open mind to avoid losing future competitiveness in the severe global business environment.

As Hankyoreh has consistently reported, the concentration of wealth and influence in the semiconductor sector, particularly with Samsung Electronics and SK Hynix dominating the KOSPI market, raises concerns about widening economic disparities. The government's continued focus on supporting these giants, including infrastructure development for mega-clusters in the Seoul metropolitan area, risks exacerbating regional imbalances. Therefore, the discussion must extend beyond corporate boardrooms to encompass a national dialogue on how these semiconductor windfalls can be equitably shared and reinvested to benefit society as a whole, ensuring that this era of prosperity translates into sustainable, inclusive growth for all Koreans.

“

Companies that grew tremendously thanks to government support, such as special laws, tax incentives, and public funds, when they were in difficulty, should consider returning profits to society, considering labor-management negotiations and social norms.