Ahead of the general strike at Samsung Electronics, cracks are being detected even inside the largest union, the Samsung Group supracompany labor union's Samsung Electronics chapter. A long-standing conflict of interests between the DS (Device Solutions) institutional sector, which handles semiconductors, and the DX (Device eXperience) institutional sector, which oversees home appliances and mobile, is surfacing.
According to the industry on the 19th, it is known that about 4,000 withdrawal applications have been filed with the Samsung Group supracompany union over the past month, and most of those leaving are understood to be Samsung Electronics DX (finished goods) institutional sector members. That is about half of the DX institutional sector's membership (about 8,000). They are strongly pushing back, saying this year's wage and bonus negotiations are effectively proceeding with only the DS institutional sector in mind. With many of the union's demands focused on overhauling the compensation system for the semiconductor business unit and abolishing the cap on performance bonuses, internal discontent in DX has reached a peak, according to analyses.
This large wave of withdrawals is expected to significantly affect the supracompany union's bargaining power and representativeness. The supracompany union said last month that it had secured 75,000 members as the only majority union within Samsung Electronics. However, the most recently announced number of members has fallen to about 71,600. In the industry, there is a view that dissatisfaction within the DX institutional sector over DS-centered union operations is leading to defections, and if withdrawals continue, maintaining majority status could become a burden.
The supracompany union is putting forward as key demands the abolition of the cap on DS institutional sector's over-profit incentives (OPI) and a revamp of the current performance bonus calculation system centered on economic value added (EVA). In particular, despite a surge in operating profit in the DS institutional sector thanks to the boom in artificial intelligence (AI) semiconductors, there is strong discontent that actual performance is not being adequately reflected because the OPI payout is capped at 50% of annual salary.
The company, on the other hand, is said to have proposed a revised plan to maintain the existing EVA-based OPI system while granting a separate special performance bonus only to the DS institutional sector. The industry believes that if the union's demands are accepted, the compensation gap between high performers in DS and employees in DX could widen much more than now. Within the DX institutional sector, there is pushback that says, "Depending on the performance cycle, we have taken turns propping up the entire company, and overhauling the compensation system around a particular business unit is unfair."
Inside DX, there are even voices saying, "During the semiconductor downturn, wasn't DS investment sustained with money earned from mobile and home appliances?" Samsung Electronics has a structure with strong independence by business unit, and performance cycles diverge widely, making internal differences in perspective inevitable. In past memory downcycles, the smartphone and home appliance businesses served as a bulwark defending overall results, while conversely, in the recent AI semiconductor boom, DS has repeatedly been responsible for most of the operating profit.
Unlike SK hynix, which is closer to a single business structure centered on memory semiconductors, the complex business structure of Samsung Electronics makes conflicts of interest among business units largely unavoidable. For the DS institutional sector, rising semiconductor prices and shortages translate into improved results, but for the DX institutional sector, the same increase in semiconductor prices directly leads to higher costs for finished goods. In practice, the mobile, TV, and home appliance business units also serve internally as major customers that purchase memory produced by DS.
An industry official said, "Samsung Electronics is closer to a federation of multiple business companies than a single manufacturing company," adding, "It is realistically difficult for one union to simultaneously represent the interests of business units like memory, foundry, smartphones, and home appliances, whose business cycles are completely different."
Given this situation, labor-labor conflict is spreading beyond a simple compensation issue into an emotional confrontation among business units. Some DS employees, reacting to the DX institutional sector's pushback, say, "Even though we are the same company, they are holding back the business unit that has hit a boom," while the DX side counters that "the union is being run in a biased way that is effectively like a DS union."
The conflict has even escalated into a legal battle. Five employees from the Samsung Electronics DX institutional sector recently filed for an injunction to suspend the supracompany union's collective bargaining with the Suwon District Court through the law firm Nova. Pointing to flaws in the general meeting notice procedures, poor operation of the delegates' council, and omission of joint bargaining procedures, they argued that "DX's unique working-condition demands were thoroughly excluded during the negotiations."
The industry views this situation as a symbolic case where Samsung Electronics' unique complex business structure has combined with labor issues. Because the business cycles and revenue structures of each business unit—memory, foundry, smartphones, home appliances, and displays—are completely different, there is a strong view that conflicts of interest among business units over compensation and bargaining could recur at any time. In particular, some inside and outside the industry also say that, depending on how performance by business unit and overall company balance are coordinated during these negotiations, the direction of Samsung Electronics' internal compensation system and labor-management relations could change.
An industry official said, "If the compensation system is designed only to match a particular business unit's boom period, internal conflict is likely to recur," adding, "If a proper balance is not struck this time, labor-labor conflict could reemerge whenever the business cycle turns."