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Profits from Semiconductor Division to Fund Electronics Business Sales? Samsung Electronics Faces Dilemma

From Hankyoreh · () Korean

Translated from Korean, summarized and contextualized by DistantNews.

At a glance

News Named sources Ongoing story
  • Samsung Electronics faces internal backlash over its plan to use profits from consumer electronics divisions to fund a "thank you festival" for the public.
  • Employees in the home appliance and smartphone divisions, who receive lower bonuses than semiconductor employees, are protesting the financial burden of the promotion.
  • The company is considering having the semiconductor division bear the costs and is working on supplementary measures to prevent disadvantages for the consumer electronics division employees.

Samsung Electronics is grappling with internal dissent over its "National Thank You Festival," a promotional event designed to share profits from its semiconductor division with the public. The initiative, which offers consumers up to a 20% rebate in digital gift certificates on purchases of TVs, refrigerators, and smartphones, has sparked protests from employees in the company's consumer electronics divisions.

Employees in the Device eXperience (DX) division, which handles home appliances and smartphones, argue that they are being unfairly burdened with the costs of an event intended to reward the public for the semiconductor division's success. This comes at a time when DX employees are already receiving significantly lower performance bonuses compared to their counterparts in the semiconductor (DS) division. The promotion, which runs for four weeks and is estimated to cost 400 billion won (approximately $290 million) in gift certificates, effectively acts as a 20-30% discount on products. This substantial reduction could negatively impact the DX division's sales and operating profit, especially given its first-quarter operating profit margin of around 6%.

We are considering measures such as the semiconductor division bearing the related financial resources, as this event was prepared as a token of gratitude for semiconductor performance.

— Samsung ElectronicsCompany's response to internal criticism regarding the cost burden of the 'Thank You Festival'.

Adding to the discontent, the DX division's employees fear that the financial strain from the festival will further reduce their performance-based bonuses, calculated using the Economic Value Added (EVA) method. While semiconductor division employees are set to receive substantial "special management bonuses" in addition to their regular compensation, DX employees face the prospect of reduced bonuses. In response to the internal backlash, Samsung Electronics stated that it is exploring options for the semiconductor division to bear the related financial resources for the event. The company also indicated it is preparing supplementary measures to ensure that employees in the DX division do not face disadvantages in their bonus calculations.

We will prepare supplementary measures so that employees in the DX division do not suffer disadvantages in their performance-based pay.

— Samsung ElectronicsCompany's commitment to address employee concerns about bonus reductions.
DistantNews Editorial

Originally published by Hankyoreh in Korean. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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