Samsung DX Division Stays Firm on Performance-Based Pay Despite Employee Backlash and Profit Slump

SUWON, South Korea — Samsung Electronics is holding its ground on its traditional compensation policies despite growing internal frustration. Facing rising discontent over a significant performance bonus gap between business divisions, the tech giant reaffirmed its strict commitment to a division-specific, performance-based pay structure.

The announcement came during an internal business briefing held on August 19 at Samsung's Suwon campus R5 Mobile Lab. Presided over by Roh Tae-Moon, President and CEO of Samsung's Device eXperience (DX) division, the meeting was called to address employees' growing grievances and outline the company's path forward in a challenging economic landscape.

A Firm "No" to Sharing the Bonus Pool

At the heart of the dispute is the stark difference in bonuses between the DX division (which handles smartphones and consumer electronics) and the Device Solutions (DS) division (which manages semiconductors).

As internal tension mounts, Samsung leadership made it clear that the company will not share bonus pools between different divisions. Emphasizing the core philosophy of "reward where there is performance," the company pointed out that this principle has historically cut both ways. Even during past semiconductor downturns—when the DS division required massive capital injections—the company funded those investments using loans from the Mobile eXperience (MX) division, which were later paid back with interest rather than simply redistributing funds.

Profit Squeeze from Skyrocketing Memory Prices

The briefing also shed light on a tough first half of the year for the DX division. While sales managed a modest 2% year-over-year increase, operating profits plummeted. The division brought in 2.1 trillion won in operating profit for the first half of this year—a steep drop to just a quarter of the 8 trillion won earned during the same period last year.

The primary culprit behind this profit squeeze is the soaring cost of memory semiconductors, which have surged to more than four times last year's prices. Because the DX division relies heavily on these chips for its finished goods (such as smartphones and tablets), the price hike has significantly inflated production costs. Samsung expects these pricing pressures to continue weighing on the MX (smartphone) division's profitability for the foreseeable future.

Looking Ahead and Addressing Union Demands

To navigate the second half of the year, Samsung outlined a three-pronged response strategy:

1. Expanding market share to maintain volume.
2. Improving business fundamentals to reduce unnecessary overhead.
3. Preparing for next-generation products slated for release next year.

Meanwhile, the labor union representing DX employees remains unsatisfied. Pointing out that May's wage settlement failed to resolve the division compensation gap, the union is demanding a compensation package equivalent to 1,000 shares of treasury stock per DX employee. Around 3,000 employees are expected to support or participate in these demands.