Samsung Electronics is projected to achieve over 100 trillion won in operating profit for the third quarter, marking a historic first for the company. While the semiconductor boom is expected to drive record results, rising bonus costs may slightly reduce the operating profit margin compared to the previous quarter.
According to industry sources, Samsung's semiconductor (DS) division disclosed the detailed criteria for a special management bonus to employees on October 7. Established through labor negotiations in May, the special bonus is funded by 10.5% of the DS division's operating profit, with no upper limit on the amount.
As semiconductor profits increase, the bonus pool will also grow. Forty percent of the total pool will be allocated to all employees in the DS division, while the remaining 60% will be distributed based on the performance of individual business units. The amount each employee receives will be calculated by multiplying a base amount by the bonus rate for their specific division.
The bonus costs are expected to impact the third-quarter results. Samsung is estimated to have accounted for approximately 20 trillion won in bonus provisions in the first half of this year alone. Even with a sharp improvement in semiconductor performance in the third quarter, additional provisions are anticipated to affect both profit growth and profitability.
Samsung will announce its preliminary third-quarter results on October 8. Analysts predict that the company’s revenue will be around 200 trillion won, with operating profit exceeding 100 trillion won for the first time. The demand for high-bandwidth memory (HBM) for artificial intelligence (AI) servers, along with rising prices, is believed to be driving this performance improvement.
Despite the expected record profits, the operating profit margin is projected to decline slightly compared to the previous quarter. Analysts suggest that increased bonus costs and currency exchange rate impacts are limiting the extent of profitability improvements.
IBK Investment & Securities forecasts that Samsung's operating profit will surpass 100 trillion won for the first time, but the operating profit margin is expected to drop by 0.1 percentage points to 52.1%. This decline is attributed to the impact of the won-dollar exchange rate and the inclusion of some bonuses that were not executed in the second quarter.
Citi Group also adjusted its third-quarter operating profit forecast for Samsung, lowering it from 115.5 trillion won to 104.1 trillion won, citing approximately 5 trillion won in adverse exchange rate effects and an additional 5 trillion won in expected bonus costs as reasons for the revision.
Notably, the newly established DS special bonus directly links semiconductor business profits to employee compensation, suggesting that it will continue to be a cost variable in future performance. With 10.5% of operating profit allocated for this purpose and no upper limit, the amount of performance compensation for employees will increase as the semiconductor market improves.
According to the details released, the special bonus will be paid out after approval at the regular shareholders' meeting in March next year, with payments occurring between late March and early April. The amount, after taxes and insurance deductions, will be paid entirely in company stock, with one-third available for immediate sale. The remainder will be subject to selling restrictions for one and two years, respectively.
The bonus rates for individual business units will be disclosed in February next year. The amounts will be reported as income for 2027 and will be subject to a maximum income tax rate of 45%. Including local income tax, the total rate will be 49.5%.
* This article has been translated by AI.
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