Reuters reported on the 16th that Samsung Electronics proposed performance bonuses in the 600% range for the memory semiconductor business unit, while offering bonuses of up to 100% for the non-memory semiconductor institutional sector.
According to minutes of wage talks obtained by Reuters that day, Samsung Electronics in March offered employees in the Device Solutions (DS) institutional sector's memory business unit performance bonuses equal to 607% of their annual salary.
By contrast, it set performance bonuses of 50–100% for Foundry and System LSI, the loss-making units within DS.
The DS institutional sector, which oversees Samsung Electronics' semiconductor business, is broadly divided into the memory business unit, focused mainly on data storage devices, and the System LSI and Foundry business units, which cover system semiconductors such as chip design and contract manufacturing.
The DS institutional sector in charge of Samsung Electronics' semiconductor business consists of three main businesses: "memory," which is centered on data storage devices; "System LSI," which encompasses system semiconductors including design and contract manufacturing; and "Foundry."
Among them, the memory business unit has recently generated massive profits on surging demand for artificial intelligence (AI), but the rest of the system semiconductor institutional sector posted large losses.
Vice President Kim Hyeong-ro, the chief negotiator for management, said, "The system semiconductor business unit recorded losses in the trillions of won, and frankly, if it weren't our company, they would probably have gone bankrupt or shut down," adding, "How could we justify paying performance bonuses?" according to Reuters.
The labor union reportedly pushed back, saying such a gap in performance bonuses would shake the company's vision of "No. 1 in system semiconductors by 2030" and spur employee departures.
Union leader Choi Seung-ho said, "If the memory business unit gets a 500 million won bonus while the Foundry business unit gets only 80 million won, would those employees have any motivation to keep working?"
If the bonus negotiations do not conclude, the union plans to strike from the 21st of this month through July 7. Amid the threat of a general strike, the company proposed resuming talks, but the union said there was no change in management's stance and announced it would press ahead with the strike.
Samsung Electronics is continuing labor-management talks amid the risk of a general strike. JP Morgan estimated that if the strike materializes, Samsung Electronics' operating profit could fall by 21 trillion–31 trillion won ($14.08 billion–$20.79 billion).