A performance pay dispute that surfaced at South Korean semiconductor companies is spreading to the semiconductor industries in Taiwan and the United States. As SK hynix and Samsung Electronics linked unlimited performance pay to operating profit swollen by an AI memory boom, the process was shared among overseas engineers, prompting rivals such as Taiwan's TSMC and U.S. chipmaker Micron to raise compensation. Analysts say performance pay has become a variable influencing compensation standards in Taiwan and the United States, beyond labor-management bargaining at a single company.

According to the industry, SK hynix labor and management approved a revised wage and collective bargaining agreement for this year in a union re-vote in September. After a first tentative deal to pay 60 percent of performance pay in shares was rejected by a margin of 25 votes, the two sides adjusted the ratio to half cash and half shares and allowed employees to take the cash portion in shares if they want. They also agreed to pay deferred performance pay for last year's results early in a lump sum, and added a new clause to defer wages if the company posts a loss. SK hynix said continuing briefings for employees ahead of the re-vote to raise understanding helped secure approval.

Samsung Electronics, following SK hynix, introduced operating profit-linked performance pay in May. When the umbrella union threatened a general strike, labor and management reached a tentative agreement just before the walkout. According to Yuanta Securities, Samsung Electronics will pay a special performance bonus with no cap, funded by 10.5 percent of performance at its semiconductor (DS) business. The DS division posted operating profit of 5.37 trillion won in the first quarter this year on an AI memory boom.

By contrast, Donghaeng union, representing the finished products (DX) division that posted a loss in the second quarter, held an indefinite sit-in near Chairman Jay Y. Lee's home, demanding joint bargaining with DS and a companywide common pool for performance pay. The company is currently maintaining its principle of calculating the pool based on performance by division.

The performance pay dispute in South Korea has moved to Taiwan. News of the two companies' negotiations was shared among TSMC engineers through Blind and Taiwan's largest online community PTT, and complaints erupted that bonus calculation standards were opaque despite large profits from an AI semiconductor boom. TSMC management began responding by adjusting business trip schedules.

TSMC is reported to have raised employee performance pay by more than 30 percent from a year earlier and expanded wage increases for lower ranks. In Taiwan's semiconductor industry, which has maintained non-union management, voices have emerged calling for institutionalising performance pay and forming unions. The operating profit-linked performance pay agreed by South Korean labor and management is seen as a comparison benchmark for compensation at overseas rivals.

In the United States, compensation competition is spreading beyond the memory industry. Micron introduced special bonuses worth more than 100 million won and restricted stock units for entry-level and mid-level engineers. Big tech companies such as Nvidia are absorbing semiconductor design and manufacturing talent with restricted stock units linked to current share prices.

As fab engineers tied to shift work and high work intensity move to big tech and design companies, the labour cost burden on manufacturers is also rising. New fabs being built under support from the U.S. CHIPS Act, including TSMC's Arizona site, Samsung Electronics' Taylor plant and Intel's new fab, are also offering salaries and incentives above initial expectations due to a shortage of skilled workers.

The move by South Korean companies to pay performance bonuses in shares is also linked to this trend. Samsung Electronics pays the full amount of its special performance bonus in shares, while SK hynix pays more than half of its performance pay in shares. Yuanta Securities analysed that Samsung Electronics' payment of its own shares has a structure similar to stock compensation at global big tech, and is a device to prevent large cash outflows and preserve funding for HBM facility investment. Stock compensation is also a form of pay that big tech companies such as Nvidia have offered to semiconductor workers.

As performance pay becomes an industry compensation benchmark beyond labor-management bargaining at a single company, Samsung Electronics and SK hynix now face competitors for compensation that have expanded from memory rivals to big tech. An industry official said, "It is true that profits have increased sharply due to the AI memory boom, but unlimited compensation centred on cash could become a fatal fixed-cost bomb for a company's financial structure," adding, "Like global big tech, it is urgent to overhaul compensation structures by increasing RSU-linked compensation or the proportion of treasury share payments to prevent cash outflows and reward key talent over the long term."