Korea and Taiwan are benefiting from the boom in the AI (artificial intelligence) semiconductor industry. But the two countries' employment report cards have diverged. In Korea, the total number of employed people fell and youth employment conditions worsened. Taiwan, by contrast, has seen a prolonged rise in employment and a solid job market for young people.
The difference lies in the structure of the semiconductor industry. Korea is tilted toward memory chips, while Taiwan has a thick ecosystem around system semiconductors spanning design, production and back-end processes. Analysts say that even in the same semiconductor boom, the spillover to overall employment differed.
◇ Number of employed: Korea "down" for the first time in 17 months, Taiwan "up" for 39 straight months
According to the Ministry of Data and Statistics (MODS), Korea had 29.12 million employed people in May, down 40,000 from a year earlier. The employment rate and labor force participation rate fell, while the unemployment rate rose.
This differs from past "employment shocks," which arrived alongside major economic blows such as plunges in growth and exports. Korea's current economic indicators are closer to a boom. Real GDP grew 1.8% in the first quarter from the previous quarter, and exports in May jumped 53.2% to an all-time high. Nominal GDP growth was also 10.5%, the highest in 50 years.
Like Korea, which is enjoying a semiconductor boost, Taiwan has also sharply raised its growth outlook this year. The Taiwanese government revised its real GDP growth forecast to 9.64% from 7.71%. That is the highest since 2010 (10.25%).
However, Taiwan's job market was solid, unlike Korea's. The most recent data for April show Taiwan had 11.63 million employed people, up 27,000 from a year earlier. The increase is small, but employment has risen for 3 years and 3 months straight since Feb. 2023.
In particular, youth employment conditions differ greatly from Korea. In Taiwan, the labor force participation rate (employed + unemployed) for ages 25 to 39 exceeds 90%. In Korea, by contrast, it is only 76.4% for ages 25 to 29 and 83.8% for those in their 30s. It is one side of the "took a break" youth phenomenon. Youth employment rates are also lower in Korea for ages 25 to 29 (71.4%) and those in their 30s (81.2%) than in Taiwan (87.4% and 89%).
◇ Memory concentration vs. all-around ecosystem: the difference in employment spillovers
Experts say the two countries' semiconductor industry structures created this gap. Kim Ki-bong, a senior researcher at the International Finance Center, said, "Taiwan has a thick ecosystem across design, production and back-end processes in system semiconductors, which have a larger market than memory semiconductors, while Korea is concentrated in memory chips."
System semiconductors, unlike memory chips such as DRAM and NAND that store data, perform computing, control and signal processing functions. The CPU (central processing unit) and GPU (graphics processing unit) are all included here. In Taiwan, fabless firms such as MediaTek and Realtek handle design; foundries such as TSMC and UMC handle production; and back-end companies such as ASE handle packaging and testing. In particular, the back end attaches produced chips to substrates and, through packaging and inspection, makes them usable in actual products. In the AI Semiconductor era, the importance of advanced packaging that bundles multiple chips together is growing.
Korea, by contrast, has a structure in which large companies such as Samsung Electronics and SK hynix have internalized much of the design, production and back-end processes centered on memory chips such as DRAM, NAND and HBM. Even if export values rise sharply, the structure differs from Taiwan's, where work spreads widely to other firms.
Kim also analyzed a difference in the share of semiconductor exports. Korea's total exports as a share of GDP were 45% last year, lower than Taiwan's 73%, and semiconductors as a share of total exports were also lower in Korea (20%) than in Taiwan (33%).