Chip shortage forcing Samsung, SK to boost hiring

Samsung Electronics' office in Seoul / Yonhap

By Baek Byung-yeul

Amid a wide range of industries struggling with semiconductor shortages, two Korean semiconductor giants ― Samsung Electronics and SK hynix ― are expanding recruitment to respond to increasing chip demand.

In its device solutions division, which oversees the semiconductor business, Samsung is recruiting experienced engineers for memory chips, large-scale system integration (LSI), foundries and other parts of the semiconductor business industry. SK hynix is also recruiting experienced professionals for its foundry engineering, memory chip and image sensor businesses.

Industry officials said they are expanding their workforces to better compete for a bigger slice of their respective markets and secure a dominant position at a time when more semiconductors will be increasingly used not only in the IT industry but also in other sectors.

For example, global carmakers are experiencing an unprecedented shortage of automotive chips affecting carmakers' vehicle production schedules. The chip shortage has occurred as semiconductor companies have prioritized chips for IT devices and home appliances, which have been in robust demand since the COVID-19 outbreak.

Analysts say a so-called semiconductor super-cycle is approaching thanks to rising chip demand stemming from a huge increase in the number of consumers spending time at home during the pandemic. However, an industry official in the local semiconductor industry pointed out that increasing the number of employees without any proper plans could hinder chip companies' financial flexibility as the semiconductor industry is highly cyclical.

“When the industry is in an upturn cycle, chip companies need a lot more workers to meet the strong chip demand. But when the industry is in a downturn, the increased number of staff could become a financial burden on chip companies,” the official said.

Samsung Electronics is being courted by both Europe and the United States, which are asking the tech giant to build its new chip-production factory in their territories. Both Europe and the U.S. are trying to woo Samsung saying they are willing to provide various benefits such as tax cuts.

Although Samsung has not made an official announcement regarding the location of its new chip factory, the company reportedly has asked the city of Austin in Texas to provide tax abatements of around $800 million over a period of 20 years.

Given Samsung has been operating a giant chip-making plant in Austin with the regional government providing various tax and administrative incentives, it appears to be rational for the Korean company to add another factory next to its existing one. Other than Austin, Arizona and somewhere in the state of New York are also mentioned as possible candidate sites for the new factory.

Regarding questions over Samsung's reported plan to build a new semiconductor manufacturing factory in Austin, the city's Department of Economic Development told The Korea Times that it has no specific comments on the matter, saying “the City of Austin does not comment on economic development prospects.”

Nevertheless, experts said semiconductor firms will expand recruitment as the chip-making process has become more segmented while demand for chips is on the rise.

“Both the chip-manufacturing departments and the chip-developing departments of semiconductor companies are seeking to increase the number of engineers because chip-developing and manufacturing processes have become subdivided and each process needs more workers,” Lee Jong-hwan, a semiconductor engineering professor at Sangmyung University, said.

While Samsung and SK are striving to strengthen their capabilities in the non-memory semiconductor sector including the contract-based chip manufacturing foundry business, Lee said the companies should keep increasing the number of employees.

“Samsung and SK are seeking to improve their competitiveness in the system semiconductor sector and especially the foundry business. I expect the two companies will be able to do better as the foundry business has something in common with the memory chip business, in which they are the most competitive in the world,” the professor said.

“To be better players, they will need more engineers as a chip company usually needs around 10,000 employees when launching a new chip-production line and most of the workers are comprised of engineers.”