Samsung Electronics is moving to break through head-on in the DX (device experience) institutional sector, where profitability has deteriorated due to rising memory semiconductor prices, by expanding market share. The strategy is to boost market dominance by increasing product sales, given that competitors face the same cost burden.
On internal discontent over the gap in performance bonuses between the DX and DS (device solutions, semiconductors) institutional sectors, the company reaffirmed its position to maintain the existing principle of compensation based on each business unit's performance.
According to the industry on the 19th, Samsung Electronics(005930) held a briefing on the business situation for employees at the Suwon campus R5 Mobile Lab that day, presided over by CEO and head of the DX institutional sector Roh Tae-Moon.
Samsung Electronics said DX institutional sector sales in the first half of this year rose about 2% from a year earlier, but profitability fell sharply due to factors including higher memory semiconductor prices. First-half operating profit in the DX institutional sector was 2.1 trillion won, about one-fourth of 8 trillion won in the same period last year.
In particular, it was analyzed that memory prices, which are more than four times higher than last year, have increased the cost burden for finished goods businesses. Samsung Electronics expects that if the upward trend in memory prices continues, the MX division, which handles smartphones, will face profitability pressure for the time being.
As a second-half response strategy, Samsung Electronics presented expanding market share, improving fundamentals, and preparing for next year's innovative products. Since the increased cost burden from the so-called "chipflation" is not unique to Samsung Electronics, the idea is to increase sales more than competitors and raise market share.
The plan is to push for higher sales by fronting the Galaxy S26 and Galaxy Z Fold 8 series, which have recently seen positive market responses. While competitors raise prices or adjust shipments due to cost burdens, the company aims to lift market share and, when memory prices stabilize, turn the expanded sales base into revenue.
At the briefing, internal conflict over the compensation gap between the DX and DS institutional sectors was also a key topic. Samsung Electronics was said to have explained that sharing a specific business unit's performance bonus pool with another institutional sector does not align with existing management principles.
Samsung Electronics explained that to reduce conflicts of interest between components businesses such as semiconductors and displays and finished goods businesses, it has effectively operated the two institutional sectors as separate companies since 2009. Because component customers become competitors in the finished goods market, the company said it even separated management support functions such as HR, finance, and accounting to prevent customer information and trade secrets from flowing to other business units.
The company said that even when the DS institutional sector had to continue large-scale investment during a semiconductor downturn in the past, it operated by using funds earned by the MX division for investment and then repaying them with interest. It said there has never been a case of sharing a specific institutional sector's performance bonus pool with another business unit, emphasizing the performance-based principle of "reward where there is performance."
However, among DX institutional sector employees, complaints continue that the gap in performance bonuses has grown excessively after the DS institutional sector's results recovered. Donghaeng, the largest union in the DX institutional sector at Samsung Electronics, plans to hold a large rally near Samsung Electronics' Seocho office in Seocho-gu, Seoul, on the 21st.
The union says that even after the wage negotiations were settled in May, the compensation gap issue between the DX and DS institutional sectors has not been resolved, and is demanding a compensation plan equivalent to 1,000 shares of treasury stock per DX institutional sector employee. The expected number of participants is about 3,000.