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Brain Drain In South Korea 40 to 50 researchers plan to leave LG Semicon, others Korea-Twenty high-level researchers have left LG Semicon since January as part of a concerted recruitment effort by foreign firms, according to recent Korean business reports. Another 40 to 50 researchers reportedly plan to leave South Korea before the end of the second fiscal quarter, though this figure is difficult to confirm. LG officials could not be reached for comment at press time. The reports blame foreign recruiters representing U.S., Taiwanese and Malaysian companies for courting the LG researchers and for attempting to recruit employees of other South Korean chipmakers. Foreign recruiters reportedly have approached as many as 400 DRAM technologists from South Korea's Big Three semiconductor manufacturers. These are startling figures considering that the region's four chipmakers- Samsung, LG, Hyundai and Anam-employ an estimated total of only 4,000 researchers. With top talent always in demand, employee allegiances in the global semiconductor industry resemble lines drawn and redrawn in sand. Will Strauss, president and principal analyst of Forward Concepts, notes that South Korean chipmakers once benefited from this environment as they used moonlighting Japanese engineers to help kick-start South Korea's DRAM business. The defections are being spurred by the planned merger of LG Semicon with Hyundai. Given the long drawn-out nature of the merger negotiations, news of defections did not surprise industry observers. The possibility of job cuts arising from the merger has made engineers from the two firms ripe for the picking. LG Semicon's brain drain could have a disproportionate impact on Hyundai. Hyundai craves LG Semicon's design expertise and manufacturing capacity, according to Dataquest DRAM analyst Jim Handy. The loss of top engineering talent could diminish LG Semicon's attractiveness to Hyundai. For LG, the exodus constitutes another dose of bad news. During the recent labor strike at LG's fabs, the firm halted shipping chips. As a consequence, it lost its OEM customers and became a spot market supplier, Handy said. Should the merger be scuttled, LG would be in an unenviable position, lacking engineering staff to produce its products, and having lost OEM interest in its wares. Specific companies who are hiring the LG employees have not been identified. In Malaysia, the only suitor interested in this type of talent would appear to be Tech Semiconductor, a firm affiliated with Micron through its purchase of Texas Instruments' DRAM assets. "Malaysia certainly does not have an infrastructure (at present)," Strauss said. He added that Tech Semiconductor currently has its feelers out for process engineers. Taiwan's Nanya Technology represents another possible suitor. The fledgling firm recently began purchasing equipment to fulfill its expansion plans (which include a new 200 millimeter fab followed by two 300mm fabs by 2005), making it a potential destination for Korean talent. The names of PowerChip, Acer Semiconductor, UMC Group and Winbond also came up as potential interested parties. How Korean firms or the Korean government will react to the defections remains unknown. While turnover has been factored into the normal course of doing business in Silicon Valley, Handy noted that a similar departure of Korean technologists in 1997 led to their eventual arrests. These researchers followed a traditional Silicon Valley model by forming a design consulting firm. Korean firms LG and Samsung cried foul and the government lent its ear to the pleas, landing the defectors at the Korean Semiconductor Technology Association in jail for allegedly supplying government financed R&D to Nanya. It should be noted that U.S. firms do not always accept the loss of key talent as the price of doing business. On March 11, Motorola's Semiconductor Products Sector (SPS) filed suit against Intel and a Motorola former employee Mark McDermott alleging "actual and threatened misappropriation of trade secrets". Motorola alleges that McDermott, former head of its Somerset Design Center, helped Intel target key individuals in the Somerset organization. |