[Current Affairs Terms]Silicon Handcuffs

◆ The term ‘Silicon Handcuffs’ refers to a new phenomenon in which semiconductor companies in Silicon Valley, whose share prices have soared amid the artificial intelligence (AI) boom, are increasingly using stock-based compensation to retain employees.

In practice, leading semiconductor firms such as NVIDIA Corp., Advanced Micro Devices Inc. (AMD), and Broadcom Inc. are awarding employees restricted stock units (RSUs) to prevent attrition. RSUs are typically vested over a set period, meaning the longer an employee stays, the more shares they receive. Conversely, leaving the company early results in forfeiting a portion of these benefits.

One NVIDIA employee told Business Insider, “Leaving the company now would mean a significant loss,” adding, “I’m not confident another company could match my current salary level.”

While this strategy has long been employed by Big Tech firms such as Amazon.com Inc. and Alphabet Inc. (Google), the three major semiconductor companies—NVIDIA, AMD, and Broadcom—are now ramping up these retention tactics as they secure multi-billion dollar contracts amid surging demand for AI chips.

Typically, full vesting of RSUs takes up to four years. However, thanks to the recent surge in share prices, some employees have already realized paper gains worth several million dollars.

A Broadcom employee noted that the value of their RSUs is “more than six times my annual salary,” adding, “With the stock price rising like this, those holding shares are preparing for a very comfortable retirement.”

Business Insider reported, “In this era of wealth created by the AI boom, NVIDIA, Broadcom, and AMD are making their employees rich while simultaneously binding them to the company. This is why the new term ‘Silicon Handcuffs’ has emerged in Silicon Valley, replacing the old ‘golden handcuffs’.”

(International Economics Department Si Yoon Yoon) syyoon@yna.co.kr

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