Korean containers and cars are ready to be shipped out at a port in Pyeongtaek, Gyeonggi Province, April 1. Korea exported $86.1 billion in March this year, posting a 48.3 percent growth over the same period of the previous year. Yonhap
Korean chipmaker SK hynix this week posted an unprecedented operating profit of 37.61 trillion won ($25.42 billion) for the first quarter. A few weeks ago, Samsung Electronics reported a record-setting 57.2 trillion won in operating profit for the same period. Together, they have earned 94 trillion won in the first three months of the year on the back of a semiconductor supercycle. More significant is that the nation's top two IT companies are poised to expand their presence in the global tech domain due to increasing worldwide demand for chips. Notably, SK hynix's operating margin stood at 72 percent, exceeding the 58 percent posted by Taiwan's TSMC in the first quarter as well as Nvidia's 65 percent recorded in the last quarter of 2025.
The performances of SK hynix and Samsung led to a surprise boom in Korea's first-quarter gross domestic product (GDP), which rose 1.7 percent, surpassing the market forecast of 0.9 percent. This growth expansion was the highest since the third quarter of 2020, when Korea saw a GDP growth of 2.2 percent. Significantly, the growth in this strategic sector prompted labor unions to demand benefits befitting the sector's stature, an issue that Korea must review seriously.
The seemingly bright Q1 figures, however, are juxtaposed with a multitude of uncertainties stemming from the Middle East conflict and increasing energy prices lingering heavily over Korea's economy. Should the current oil prices of over $100 crude per barrel continue throughout the year, it is expected to reduce Korea’s growth by 0.2 percentage points. Additionally, the semiconductor sector is credited with up to 55 percent of this year's Q1 growth, which mandates firms to find engine growth for sustainability. The Korean bourse is making entry into uncharted territory, but its volatility is markedly higher relative to other markets.
There is urgency in calling for measures to prepare for possible downturns in the second quarter and onward, even with dark hints of stagflation casting over the Korean economic landscape.
Challenges are piling up. While the war in Iran is an externality, the resolution of which depends on the will of the U.S. and Iran, domestic issues pose a grave challenge as well. Unionized workers at Samsung Electronics have warned of a full-scale strike in May if their demands for a fair distribution of the fruits of their labor, which resulted in record-high sales, are not met. They have asked the company for a 7 percent base salary increase and to distribute 15 percent of its annual operating profit as bonus pay for employees. Moreover, one of the contentious demands the workers have set is for the company to eliminate the 50 percent annual base salary cap on bonus payments.
It's natural for workers to ask for a fair and equitable allocation of earnings if the company performs well. The high bonus payout at SK hynix may well be lending weight to the demands of Samsung workers. Should the unionized workers walk out, the company is at risk of incurring a loss of several trillion won and a disruption to the firm's output. The semiconductor industry's boon is foremost credited to the company and its workers' dedication, but recognized as a global strategic sector, it has also been the beneficiary of the government support, and shareholders support it as well. Last week, Samsung shareholders staged a counter-protest criticizing the demands of the labor unions.
The fierce global competition in the industry has seen TSMC building production bases in Japan and the U.S., with increased investments in research and development. The U.S. government is also investing heavily in its own sector with strategic and financial incentives. In Korea, the issue of bonus payments to employees should be worked out prudently and wisely, with future investment and competition in mind as well.
Source: Korea Times News
