Samsung Electronics' semiconductor division's performance bonus for the first half of this year has decreased significantly compared to previous years. The underperformance of HBM (high bandwidth memory), a key component of artificial intelligence (AI) semiconductors, continued, and the foundry business also recorded successive losses, leading to a generally low performance bonus payout rate.
On the 4th, Samsung Electronics notified the payout rate for this year's first half 'Target Achievement Incentive' (TAI) through its internal network. TAI is one of Samsung Electronics' performance bonus systems, which pays up to 100% of the monthly base salary based on the results of evaluations of the affiliated institutional sector and business division once each in the first and second halves of the year.
The institutional sector responsible for Samsung Electronics' semiconductor business, the Device Solutions (DS) division, is expected to receive between 0% and 25% of the monthly base salary. The memory department is set to receive 25%, while the system LSI division and semiconductor research institute will receive 12.5%. The foundry division's payout rate has been determined at 0% due to the impact of business losses.
Since the introduction of this system in 2015 until the first half of 2022, the DS division had received the maximum of 100% of the monthly base salary each time, but starting from the second half of 2022, the performance bonus size shrank due to poor results. In the first half of last year, the performance bonus slightly increased, with the payout rate set at between 37.5% and 75% of the monthly base salary, while in the second half of last year, the memory division, recognized for improved performance compared to the previous year, received a bonus of 200%, exceeding the maximum criteria. The system LSI and foundry divisions received 25%.
In the first half of this year, a significant drop in operating profit is expected, especially for NAND flash among major memory products, and a continued loss in non-memory institutional sectors has resulted in a significant decrease in performance bonus payout rates. An executive from Samsung Electronics' DS division has decided to forgo the TAI for the first half of the year as a commitment to improve management performance.
In the case of the Device Experience (DX) division, the video display (VD) and home appliance divisions are expected to receive 37.5% and 50% of the monthly base salary, respectively.
The Mobile Experience (MX) division will receive the highest payout of 75% among the divisions due to strong sales of the Galaxy S25 series launched in the first quarter of this year. The medical devices division is also set to receive 75%, while the network division will receive 50%.
In the first quarter, Samsung Electronics recorded better results than market expectations; however, in the second quarter, it is projected to fall short of market expectations due to the impacts of exchange rate declines, the widening losses in the foundry business, and the diminishing effects of new mobile product launches. Samsung Electronics will announce its preliminary results for the second quarter on the 8th, and detailed results by division will be disclosed at the end of this month.
Samsung affiliates also experienced contrasting fortunes based on performance. Samsung Display's large division, which is responsible for TV panels, will receive 75%, while the medium and small divisions responsible for IT panels will receive 100%.
Samsung Electro-Mechanics' component division, responsible for multilayer ceramic capacitors (MLCC), will receive 100%, while other divisions will receive 75%.
Samsung SDI's electronic materials division is set to receive 25%, while the medium, large, and small divisions have all been determined to receive 0%.