A MARTÍNEZ, HOST:
The construction of artificial intelligence infrastructure is revolutionizing industries around the world. In South Korea, for example, some factory workers who make semiconductors essential to AI are paid like executives. Instead of calling these workers blue-collar or white-collar, South Koreans describe them as silicon-collar. NPR's Anthony Kuhn takes us to South Korea's silicon belt to observe the chip boom's impact on South Korean society.
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ANTHONY KUHN, BYLINE: Young couples pushing babies in strollers are shopping at the Lotte department store in the Dongtan district of Hwaseong City, half an hour by train from Seoul. Sung Min Kim is the general manager of the store's sales planning team. He says sales were up 20% in the first five months of this year, especially luxury goods, home appliances and furniture.
SUNG MIN KIM: (Through interpreter) The Dongtan commercial district has a significantly higher proportion of young newlyweds who work for large corporations compared to other regions. We can see that there is a large population working for nearby semiconductor companies.
KUHN: Many silicon-collar employees live and work here for Samsung and SK Hynix. Together, the firms control about 80% of the world's high-bandwidth memory chips used in AI. In the first three months of this year, global chip demand pushed Samsung's profits up by 756%, and unionized Samsung workers wanted a cut of it.
UNIDENTIFIED PERSON: (Shouting in Korean).
(CHEERING)
KUHN: They threatened to go on strike. Samsung agreed to give 78,000 workers 12% of the chip division's profits as bonuses. If they meet production targets, some workers could get bonuses of up to $400,000 in stocks and cash - roughly three times their average salary. Meanwhile, Samsung's rival SK Hynix gave its workers a 10% cut of profits. Together, the two companies' bonuses could add up to about 2.5% of South Korea's GDP.
The chip boom has sent Dongtan's real estate prices surging. Real estate agent Yoo Chang-wan sells apartments in a building where prices for four-bedroom apartments have risen to more than $1.7 million. Yoo says that Dongtan residents enjoy excellent schools and facilities, including several golf courses.
YOO CHANG-WAN: (Through interpreter) Since folks working at Samsung Electronics and Hynix have a lot of disposable income, they play a lot of golf.
KUHN: Yeungnam University sociologist Huh Changdeog says that the silicon-collar workers are now seen by other workers as aristocrats. Many Samsung workers making TVs and smartphones are bitter that their bonuses were just 1% of their chip-making colleagues'. Huh says the downside to the chip boom is a sense of alienation, which could tear the fabric of South Korean society.
HUH CHANGDEOG: Social anger.
(Through interpreter) When social anger arises and increases, society does not move forward stably, and things like random crimes start occurring frequently.
KUHN: South Korean chipmakers benefited from decades of state backing and bailouts at taxpayers' expense, but Huh argues that workers who threaten to strike seem to have forgotten this.
HUH: (Through interpreter) Negotiations should take place within a scope that accounts for reinvestment and allows the company to continue growing, rather than acting as if all the surplus was achieved solely through their efforts.
KUHN: While workers and managers fight over chip profits, the government is debating what to do with the tax windfall. Skeptics fear the boom could go bust. They suggest strengthening the social safety net and paying down the national debt. Optimists see AI and chips as part of a new industrial structure that will keep demand strong. They call for reinvesting the surplus in more chip factories.
Last week, South Korea's President Lee Jae Myung announced that Samsung and SK Hynix will build a new half-trillion-dollar semiconductor manufacturing base with government support in the country's southwest. But Lee has also expressed deep concerns.
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PRESIDENT LEE JAE MYUNG: (Through interpreter) The government must painfully acknowledge the sense of alienation felt by young people, who look at record-shattering corporate bonuses and an all-time high KOSPI index and feel it's a story from a completely different world.
KUHN: This week, South Korea's government said it plans to use surplus tax revenue to create a future fund. It would be used both to invest in more chip production and support young Koreans left out of the chip boom. Anthony Kuhn, NPR News, Dongtan, South Korea.
(SOUNDBITE OF MUSIC) Transcript provided by NPR, Copyright NPR.
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