Volkswacht Bodensee - 'Immense' leverage: why AI chip workers are demanding more

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, analysts say.

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.

- Why are chipmakers suddenly so flush? -

Rapid advances in AI systems since text generator ChatGPT's 2022 breakthrough have sparked a gold rush for 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 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", William Keating, head of semiconductor research firm Ingenuity, told AFP.

- Do workers see the benefits? -

In the United States, 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", Neil Shah, co-founder of Counterpoint Research, told AFP.

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

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

Under the union deal, around 60 percent 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.

- Will the Samsung deal inspire others? -

A Samsung strike "would almost certainly have been the biggest work stoppage in the history of the global semiconductor industry", South Korean writer and researcher Kap Seol said 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," TSMC said in a statement.

TSMC boss CC Wei held a meeting to explain the bonus situation to staff on Wednesday, and the atmosphere was "calm and friendly", a company spokesperson told AFP, adding that annual bonuses were set to grow "more than 30 percent" 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.

- Who else is cashing in? -

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

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

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

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

C.Stoecklin--VB