Samsung Electronics President Roh Tae-moon [Samsung Electronics]
Samsung Electronics President Roh Tae-moon [Samsung Electronics]

Roh Tae-moon, the chief executive overseeing Samsung Electronics' device experience division, acknowledged that the unit is heading for a year-end loss but pledged to push through by expanding market share and overhauling the business.

On the contentious issue of the bonus gap between the DX division and the semiconductor DS division, Roh reaffirmed the company's performance-based pay principle — effectively arguing that the two units have long operated as separate entities and that rewards should follow results.

According to industry sources, Roh held a management briefing for employees on Wednesday.

The company said DX division sales grew about 2 percent in the first half of this year compared with the same period last year, but operating profit fell sharply, weighed down by memory chip prices that have risen more than fourfold from a year earlier.

Samsung Electronics' semiannual report shows the DX division posted operating profit of 2.1 trillion won ($1.5 billion) in the first half of this year — just one-quarter of the 8 trillion won it earned in the same period last year.

The profitability of the MX business unit, which handles mobile devices, appears to have deteriorated particularly sharply as the cost of procuring mobile memory chips has surged.

Samsung Electronics sources mobile memory from suppliers including US-based Micron and Japan's Kioxia; the average purchase price for mobile memory has risen about 211 percent from last year's level.

The company said the MX unit is unlikely to escape losses for now as long as memory prices continue to climb.

For the second half of the year, the DX division outlined three strategic priorities: expanding market share, continuing structural improvements, and preparing next-generation products for next year.

The strategy is to use the current period of "chipflation" — when rivals face the same cost pressures — as an opportunity to gain ground on competitors.

"We will get back on track quickly through AI-driven innovation and efficiency gains," Roh said, adding that the company would actively support companywide education to advance future growth areas including RX (robot transformation) and AX (AI transformation) and to promote effective use of AI.

The company also used the briefing to explain the rationale behind its divisional structure, which separates the finished-product and components businesses, and signaled that additional compensation for DX employees beyond existing terms would not be forthcoming.

Samsung Electronics has operated its finished-product business — now the DX division — and its components business, the DS division, as separate units since 2009, reflecting the reality that its components customers are often competitors in the finished-product market.

To prevent confidential information from component customers from leaking into the finished-product side, the company separated management support functions including human resources, finance and accounting, effectively running the two divisions as two independent companies under one roof.

The company noted that when the DS division faced financial difficulties during a prolonged semiconductor downturn over the three to four years through last year, funds generated by the MX unit were used to support semiconductor investment — but the DS division subsequently repaid those funds to the MX unit with interest.

Since the divisional structure was introduced in 2009, the company said, surplus bonus funds from one division have never been shared with another. The company used this explanation to reemphasize its principle that compensation follows performance.

"Our future strategy is progressing well and producing results. We will work hard to return to normal as quickly as possible," Roh said, encouraging employees. "Let us work together to generate results and earn special bonuses."

Meanwhile, the Samsung Electronics Workers' Union Donghaeng — the largest union in the DX division — plans to hold a large rally near Samsung Electronics' Seocho headquarters in Seocho-gu, Seoul, on Friday afternoon. The union expects about 3,000 people to attend.

The Donghaeng union contends that the DX division was sidelined during wage negotiations that management and labor agreed on last May, and argues that the compensation gap between the DX division and the DS (Device Solutions) division, which handles the semiconductor business, has grown excessive.


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