As Samsung Electronics prepares to announce record earnings driven by its semiconductor (DS) division, discontent within the Device Experience (DX) division, which oversees mobile and home appliance products, has reached a peak. The widening compensation gap between the two divisions has prompted CEO and DX head Noh Tae-moon to take steps to address internal conflicts.
According to industry sources, Samsung plans to hold a large-scale town hall meeting for all DX employees next month. This follows a recent closed-door briefing on management status for select team leaders and staff.
Noh and other top executives from the DX division will take the stage to explain the current business situation and engage in a question-and-answer session. This initiative aims to alleviate employee dissatisfaction stemming from a low compensation structure, ongoing performance downturn, and the challenges of transitioning to AI (AX).
The primary source of internal discontent is the compensation disparity with the DS division. Earlier this year, Samsung's labor and management agreed to establish a special performance bonus funded by 10.5% of the DS division's operating profit. This plan, which has no upper limit, contrasts sharply with the DX division, which was excluded from this special bonus.
Additionally, the first-half target achievement incentive (TAI) saw the DS memory division receive the maximum of 100% of their base salary, while the mobile (MX) and visual display (VD) sectors of the DX division received only 50% and 25%, respectively, further highlighting the disparity.
DX employees are expressing strong opposition to the imbalance in performance bonuses, arguing that the decline in the home appliance and mobile sectors is due to rising raw material costs and structural market challenges, not a lack of effort. The DX division reported a revenue of 48 trillion won and an operating loss of 800 billion won in the second quarter, marking its first quarterly deficit since its integration in 2021. Even the MX division, responsible for smartphones, recorded a loss of 700 billion won.
The cost pressures on the finished product business are severe. According to Samsung's semi-annual report, the DX division's purchases of key raw materials, including mobile application processors and memory, reached 12.48 trillion won in the first half of the year, accounting for nearly 30% of total raw material purchases. The surge in global memory prices has further exacerbated the cost burden on the finished product division. The recently launched Galaxy Z Flip and Fold 8 series saw a price increase of about 5% compared to previous models to protect profit margins.
As the situation worsens, Noh is committed to revitalizing the organizational atmosphere and enhancing communication through the town hall meeting. The strategy includes expanding sales of high-value premium products and strengthening the AI transition (AX) to improve profitability across the finished product lines. It is also expected that Noh will propose a more diversified compensation structure that employees can accept.
An industry insider noted, "The compensation gap between divisions due to the strong performance of the DS division has become a source of internal conflict. Whether the core management can present specific compensation plans and a vision during the town hall meeting will be a turning point in resolving these conflicts."
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.