The Device Solutions (DS) institutional sector in charge of Samsung Electronics' semiconductor business will receive up to 100% of base pay as a target achievement incentive (TAI) for the first half of this year. As semiconductor results improved on expanding demand for artificial intelligence (AI) servers and rising memory prices, the memory division kept the maximum payout rate, following the second half of last year.
According to the industry on the 6th, Samsung Electronics announced the TAI payout rates for the first half via its intranet that afternoon. The payout date is the 8th. TAI is one of Samsung Electronics' incentive schemes, paid once each in the first and second halves every year, with up to 100% of monthly base pay awarded differentially by division based on results and evaluations.
In the DS institutional sector, the memory division will receive 100% of base pay. The memory division saw a sharp increase in results on the back of expanded supply of high bandwidth memory (HBM) and rising prices of commodity DRAM. The industry believes the memory semiconductor boom in the first half of this year was reflected in the incentive payout rates.
The System LSI and foundry divisions were set at 75% each. The Semiconductor Research Center and SAIT (formerly Samsung Advanced Institute of Technology), and common organizations will receive 100%. Although non-memory still faces profitability pressure, the payout rate improved from the second half of last year, partly reflecting the recovery in semiconductor market conditions.
The Device eXperience (DX) institutional sector, which oversees mobile and TV/home appliances, will receive payout rates of 25% to 75% by division. The Mobile eXperience (MX) division, which handles smartphones, was set at 50% of base pay. While the Galaxy S26 series boosted sales in the first half, the rise in memory prices increased costs and intensifying competition in the smartphone market appears to have had an impact.
The Visual Display (VD) division in charge of TVs will also receive 50%. The Digital Appliances (DA) division will receive 25%, the lowest among major divisions within the DX institutional sector. TVs and home appliances appear to have found it difficult to defend profitability as global demand softened and promotional competition persisted.
Within the DX institutional sector, the medical device division and Korea headquarters will receive a relatively high 75%. The networks division, business support, and other organizations were set at 50%.
Internal backlash over incentive gaps is continuing. The Samsung Electronics Together union, centered on DX institutional sector members, plans to hold a rally near the Suwon campus on the 16th to demand follow-up measures from management on this year's wage negotiations. The union is targeting a turnout of 2,000 to 3,000 people.
Earlier, Samsung Electronics labor and management agreed on a wage deal that includes creating a special management performance bonus funded by 10.5% of the DS institutional sector's business results. As a result, DS employees have higher expectations for additional compensation, while a separate employee stock grant plan applied to the DX institutional sector, fueling dissatisfaction over compensation gaps.
Brokerages expect Samsung Electronics' first-half results to have improved significantly, led by the memory business. Samsung Electronics will release its preliminary results for the second quarter on the 7th. The preliminary release discloses only sales and operating profit on a consolidation basis. Detailed items such as results and revenue by division, profitability, and the size of provisions for incentives will be disclosed in the finalized results announcement at the end of this month.
Electronics affiliates such as Samsung Display, Samsung Electro-Mechanics, and Samsung SDI also announced their first-half TAI payout rates that day. Samsung Display will pay 75% of base pay for the large-panel division and 100% for the small and mid-size division. Samsung Electro-Mechanics will pay 100% across all divisions, and Samsung SDI set its payout rate at 75%.