Samsung Electronics' labor and management, which averted a strike crisis, are nearing the end of their negotiations over performance bonuses, but the mood inside the company shows little sign of calming. Although a tentative agreement dramatically reached just before a general strike passed a yes-or-no vote, the prevailing view is that the ripple effects of the inter-division conflicts that erupted during the talks will not be easily contained.
On the 28th, tensions within Samsung Electronics were rising among the DS (semiconductors) division's memory and non-memory businesses, and between the DS division and the DX (finished goods) division. A senior Samsung official said, "Even within the DX division, the MX (Mobile eXperience) unit, which handles smartphones, has built a long-standing collaboration system with Samsung semiconductors, but after this incident, conflicts among employees have grown, and this could pose a threat that may weaken the company's competitiveness over the mid to long term."
The source of the inter-division conflict is the debate over fairness in performance bonuses. With the creation of a special management performance bonus for the DS division in the tentative labor-management agreement, the memory business can now offer compensation of up to 500 million to 600 million won per employee, while compensation for DX division employees is expected to be around 6 million won. The gap is nearing 100-fold between colleagues wearing the same company badge.
Voices are growing that the causal link between investment and performance has broken down, pointing to contradictions in the resulting compensation system. In 2022–2023, when the semiconductor market hit bottom and the DS division racked up tens of trillions of won in losses, it was the DX division—represented by Galaxy smartphones and TVs and home appliances—that propped up Samsung Electronics' results. In particular, when semiconductors wavered, smartphones solidly served as the company's cash cow.
However, as the DS division generated large profits amid a global semiconductor boom, the fruits of compensation flowed thoroughly to the DS division. As a result, morale among non-semiconductor division employees and the fairness controversy are expected to persist for some time. In fact, on Samsung Electronics' internal bulletin board "NowTalk," posts containing the phrases "DX passing" and "in mourning" have been appearing one after another. A union official at Samsung Electronics said, "Every time people around us asked, 'How many hundreds of millions are you getting this time?,' employees felt an extreme sense of futility."
The problem is that signs of such fissures are also appearing within semiconductors. Although the foundry business and the Semiconductor Research Center made no small contribution to developing sixth-generation high-bandwidth memory (HBM4) and restoring the memory business, complaints are erupting internally that most of the rewards went to the memory business. It is highly likely to be a negative factor if the foundry's key personnel—whom Samsung Electronics must retain to catch up with Taiwan's TSMC—have less incentive to remain in a division treated as "second tier."
Concerns are growing further because this agreement is not a one-off payment. The tentative agreement includes a provision to use 10.5% of the DS division's operating profit as funding for special management performance bonuses over the next 10 years. In the industry, some say this "institutionalized conflict rather than resolving it." The semiconductor market rises and falls in cycles. If the artificial intelligence (AI) investment cycle cools or the DX division's performance turns around, it means the debate over compensation among divisions could reignite in an even fiercer form.