A sister entry to the technical article I just posted about the RAM shortage
A few months ago, back in May, I was in Seoul with the family. We were attending a gathering of friends, and I introduced myself to a fellow husband:
"Samsung Electronics," he answered.
"Oh really, what do you work on?"
"I work on the chemical mixes for chip wafers"
"Oh really! Congratulations!!" I said with a wink.
"No... no, it's not me. I'm not one of them." he sighed.
Besides the Iran conflict, there was one consistent news story dominating the headlines, and on the minds of nearly every working citizen there: We were in the midst of a seemingly huge bubble. On the surface it seemed to be an entire melt-up of the KOSPI index, easily the top performer in the world. And right below that surface, most folks realized that the Korean stock market was being dragged up by two names: SK Hynix and Samsung Electronics (the company unit that oversaw Samsung Semiconductor).
Back in 2025, a bargaining agreement with the workers at Hynix yielded a profit-sharing scheme, which is not unheard of, but interestingly, it also removed an absolute cap on the bonus, previously at 10x base pay. Fast forward a few months, and the build-up of infrastructure investments in the AI arms race led to a shortage of memory components. Ostensibly, this should really have only affected the commercial-facing high performance memory units, but inevitably, the shortened technology distance between cutting-edge components and those destined for consumer devices meant that the entire market was getting tangled. Whatever the case or rationale, the effects were clear: there was indeed a supply chain disruption, and prices were getting pushed higher.
For the semiconductor industry, most notably represented by computing/graphics chipsets (the likes of Nvidia, Intel, and TSMC) and NAND/RAM makers (Samsung, Hynix, Micron) is so capital-intensive, technology-heavy, and cutthroat that there are only a handful of real players worldwide. It's also something that is heavily politicized, with the most notable conflicts involving advanced chipsets, the tools that help make them, and their usage in AI applications. Given the market conditions and political risks on all sides, it seemed like a perfect storm just waiting for some kind of supply/demand disruption to set the whole market ablaze.
Back to Korea. The reason why this particular issue was on everyone's minds was that money was getting made. Lots of money, by relatively few people. The initial indicators were that, given the rapidly changing market, the average Hynix employee was poised to get a payday worth the better part of $1 million. Those are US Dollars, and covered personnel included factory line workers. With the exception of a handful of terminal-level executives, that kind of money was unheard of. And mind you, this was a bargaining agreement that was supposed to cover not a few dozen execs, but rather over 30,000 employees. When the profit share was first negotiated, it was estimated at being worth $70-80k. Already a very generous amount that would be the envy of corporate employees, let alone manufacturing line workers. This year, the number shot up to somewhere in the range of $550-700k per employee.
The Hynix deal, as is the case with so many other industries, was contagious: the Samsung Electronics workers who saw that deal get negotiated wanted something, as well. The thing was, they were negotiating in 2026, when this bubble was actively playing out on a much greater level than just months prior. Someone else is getting rich, and they naturally needed to get in on the action. By all indicators, it was a tough negotiation, whose failure would threaten to make the supply/demand even worse. An agreement was finally reached a few days before we arrived in Seoul, so it was just all over the news. By all reports, eligible employees (those who worked directly on the semiconductor product lines) were going to average $300-400k. Not as good as the Hynix deal, but still well in the realm of Monopoly money.
It wasn't long before the tabloids and some outrageous news started to surface. Some stories suggested that employees of these companies were being warned to not overtly identify their employer. Other stories allegedly citing sources at luxury car dealers reported a flood of luxury car buyers among these newly bonused employees. People got mad. Some suggested, as those firms that got a hefty amount of startup and capital investment funding from government sources years ago, they ought to share the profits with the Korean public at large. Workers who previously sought to work in lucrative overseas assignments at these companies withdrew their applications once it was revealed that their bonus eligibility would become invalidated. In essence, this grew to become a huge workforce satisfaction issue, as well as a societal issue at large. Korea is still chock full of gig workers, gender pay gaps, and struggling small businesses. Every new news report was like a fresh canker opening up.
Even within the major tech campuses, the bonus culture introduces toxic hierarchy: While full-time Samsung or Hynix engineers receive eye-popping checks, the contract workers, security staff, and cafeteria staff sharing the exact same building receive nothing from the profit-sharing pool. Friction exists even among full-time employees. If the semiconductor division receives a 50% bonus while the consumer electronics or display division gets 0% to 5% due to a market downturn, internal company morale plummets, causing bitter rivalries across corporate cafeterias.
From trends already observed in previous years, the concentration of semiconductor wealth in specific geographic hubs—like Pangyo, Suwon, and Icheon—has created localized housing micro-bubbles. Bonus-rich tech workers can afford to outbid average families on real estate, driving up apartment prices and rental costs in satellite cities south of Seoul. When apartment prices in these regions rise to accommodate the top 10% of earners, local service workers, teachers, and municipal employees are priced out of the very communities they serve. Mind you, that all happened before 2026. If you consider what effects start spilling out with a sudden influx of paycheck wealth 10x greater, the effects are scary to imagine.
Top-tier universities now offer specialized "pre-employment semiconductor tracks" directly funded by Samsung and Hynix that guarantee jobs upon graduation. As a result, students are abandoning traditional humanities, sciences, and even prestigious medical programs to re-cram for entrance exams just to secure a spot in a chip track. This hyper-fixation inevitably starves other vital industries such as basic sciences, green energy, public health, and local infrastructure of elite talent, turning the national economy into a precarious one-trick pony. The bubble is real.
And finally, let's not forget the FOMO from the retail shareholders' standpoint. The one question everyone was asking, "is it too late to get in on some of the stock gains??" Back at the gathering in Seoul, this was also a topic of conversation that everyone was interested in, but nobody really wanted to talk about. And nobody wanted to talk about it less than the gentleman I mentioned at the beginning. It must be torture, I privately thought, to be working so close with colleagues on a project, only to find out that you weren't going to be paid at anywhere near the others' compensation. And worse, the whole world around you is probably under the assumption that you're one of the lucky recipients!
In the larger scheme of things, I only mentioned that what was happening in the market had the makings of a bubble. It may still have far to run, but at some point, the stock will run down, the music will stop, and a lot of people will be left holding the bag. Most likely, from all examples in the past, the price will be paid by retail, mom and pop investors who just wanted to get a little bit of that semiconductor magic in their portfolios. In terms of what long term effects this carries for the Korean society at large, I have no idea.
P.S. - Since I had this set of conversations in the waning days of May, shares of Hynix went up another 50%, and then proceeded to halve.
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