SK Hynix Bonuses Revive Consumer Spending in Cheongju

A Bank of Korea analysis found that consumer spending in regions hosting semiconductor plants rose by up to 4 percent more than in other areas immediately after the companies paid out performance bonuses. Riding the memory chip (semiconductors that store data) boom, Samsung Electronics and SK Hynix posted record operating profits (profit remaining after subtracting costs and other business expenses from revenue) and paid out bonuses, and that money flowed into local domestic consumption.

However, the patterns differed between Icheon and Cheongju, where both companies have plants. In Icheon, close to the Seoul metropolitan area, the bonuses fueled a rise in nearby home purchases, while in Cheongju, spending went more toward consumption than the housing market, the analysis found.

SK Hynix paid 374.6 billion won in corporate local income tax to Cheongju City this year. Kim Hoon-ah, head of Cheongju City's tax affairs division, said, "It is a great help to the city's fiscal management," adding, "Because it is a general-purpose tax, it cannot be used for designated projects, but it is allocated to the general budget and can be spent across all areas, including urban development and culture and welfare programs."