A green traffic light in front of Samsung Electronics' Pyeongtaek campus in Gyeonggi on April 30 [YONHAP]
Korea has been seeing record-breaking exports and production output, but behind the numbers, much of the broader economy — especially nonchip sectors — remains sluggish, if not stagnant.
As semiconductors continue to capture an outsize share of the country’s economic gains, the labor market is becoming increasingly polarized, forming a “K-shaped” divide, with wage gaps widening between chipmakers and other industries, as well as between large companies and small businesses.
The K-shaped divide refers to an uneven trend in which some industries and income groups recover or grow quickly while others struggle or decline, resulting in a “K” shape on economic graphs.
Exports by the country’s five biggest exporters, including Samsung Electronics and SK hynix, reached $95.7 billion from January through March — 43.5 percent of Korea’s total exports of $219.9 billion, up 14.8 percentage points from the same period last year.
In other words, just five companies — 0.007 percent of the nation’s 67,531 exporters — generated nearly half of all exports in the first quarter of this year, according to the Ministry of Data and Statistics. This also marked the first time that exports by the top five companies surpassed 40 percent of total exports since data compilation began in 2015.
The returns of the export boom were similarly concentrated among a handful of firms. The on-year export growth of the five biggest exporters totaled $49.96 billion from January through March, accounting for 82.8 percent of the country’s total export increase of $60.33 billion.
Even within Korea’s top 10 exporters, the first five companies accounted for 86.8 percent of exports, up 8.4 percentage points from the previous year.
A high bandwidth memory, or HBM, chip manufactured by SK hynix is displayed at the Reuters office in San Francisco on Jan. 13. [REUTERS/YONHAP]
The widening export divide has been largely fueled by the semiconductor supercycle, which in turn has been driven by surging investment in AI.
Chip exports between January and April stood at $110.95 billion, a 146 percent jump from the same period last year, according to the Korea Customs Service. Semiconductors accounted for 36.2 percent of total exports, up 15.6 percentage points from the previous year.
Outside the chip sector, exports grew just 13.3 percent, as broader manufacturing remained weak.
Additionally, while April’s semiconductor exports surged 173.5 percent on year, those of seven of the country’s 15 key export categories declined. Auto exports fell 5.5 percent, auto parts 6 percent and general machinery 2.6 percent. Home appliance exports plunged 20 percent.
A rise in raw material costs — a result of the weak won and intensifying competition from Chinese companies amid slowing global demand — has weighed on these industries.
The gap between chipmakers and other manufacturers is starkly apparent even on factory floors.
The overall manufacturing sector’s production output rose 3 percent in the first quarter of this year compared to the previous quarter, according to the Data Ministry. The driving force of the uptick was a 14.1 percent jump in chip production — the sharpest increase since the second quarter of 2023, when production climbed 19 percent. When excluding semiconductors, however, manufacturing output rose merely 0.2 percent.
The semiconductor industry is also highly capital-intensive, meaning that it relies far more heavily on machinery, facilities and infrastructure than on labor to produce goods. This structure limits the chip boom’s broader spillover effects on employment. In fact, a 1 billion won ($661,300) increase in output creates only 2.1 jobs in the semiconductor sector, roughly one-third of the manufacturing average of 6.2 jobs, according to the Korea Development Institute.
“As the semiconductor industry is capital-intensive, job creation effects remain limited relative to sales growth, potentially creating a discrepancy between semiconductor-driven macroeconomic indicators and the economic conditions households actually experience,” the National Assembly Budget Office wrote in a recent report.
A semiconductor production line at Samsung Electronics [SAMSUNG ELECTRONICS]
Polarization is also severe within the semiconductor industry itself.
Average monthly wages for regular employees in the “electronic components, computers, video, audio and communications equipment manufacturing” sector — which includes semiconductors — reached 7.46 million won last year, according to a labor survey conducted by the Data Ministry. That figure was 2.77 times higher than the 2.69 million won earned
by temporary and daily workers, marking the widest gap since such data compilation began.
The divide has widened every year since 2023.
By company size, regular employees at firms with 300 or more workers earned an average of 9.42 million won a month, more than double the 4.5 million won paid at smaller firms with fewer than 300 employees. Temporary and daily workers at smaller firms earned just 1.76 million won a month.
Wage polarization has intensified across various
sectors beyond the chip industry as well.
Last year, regular employees across all industries earned an average monthly wage of 4.57 million won — 2.65 million won higher than that of nonregular workers, whose average monthly pay was 1.92 million won.
A production plant of fabric manufacturer in Ansan, Gyeonggi, on March 31 [YONHAP]
Hourly wages showed a similar gap. While regular workers earned 28,599 won per hour, nonregular workers earned 18,635 won per hour. The wage gap has steadily widened from
5,716 won in 2020 to 9,964 won last year.
If major firms such as Samsung Electronics and SK hynix pay out large performance bonuses to regular employees this year, the wage divide could widen further.
“While semiconductors alone are booming, manufacturing and service sectors that employ large numbers of workers are seeing only limited gains in productivity and added value, leaving little room for meaningful wage growth, said Yang Jun-sok, an economics professor at the Catholic University of Korea. “The bigger problem is that competitiveness and productivity in industries outside semiconductors have stagnated.”
“The government should set aside excess tax revenue generated during the chip boom in the form of a fund to ensure research and development investment continues even during downturns,” said Kim Yang-paeng, a research fellow at the Korea Institute for Industrial Economics and Trade.
“We need to create a foundation for long-term investment in future industries such as biotechnology and quantum technology that are not yet profitable,” Kim said. “That is the only way to ease the concentration and imbalance across [various] industries.”
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
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