Samsung Must Deal With The Serious Drama Its $340k Chip Bonuses Caused

Samsung Electronics recently approved approximately $26.6 billion in bonuses for employees of its DS chip division. The average bonus per employee is around $339,000. These bonuses have been provided across the board to all employees in the division, including those that make less than a quarter of the bonus amount as their annual salary.

Not everything at the company is happy. Employees at the company's DX division, which is responsible for smartphones, TVs, home appliances, etc, are particularly are not mincing their words about how unhappy they are.

Both DS and DX exist within Samsung Electronics. They're not separate corporate entities per se, but internal divisions within the wider organization. All earnings and profits ultimately flow to Samsung Electronics regardless of the division generating them.

Over the past few quarters, DS has been generating revenues and profits like there is no tomorrow. That's largely due to the substantial rise in memory chip prices due to the AI demand. Samsung Electronics has given substantial bonuses to DS employees while workers are DX have been left out, primarily because DX hasn't been that profitable.

Employees are grumbling on Samsung's internal message boards. Someone posted a message saying “May the late Samsung Electronics DX division rest in peace,” along with an image of a wreath with a black ribbon.

Employees are protesting against what they feel is the unfair distribution of performance pay. It's not entirely unfair. These are the reactions of people who watched the company they work for hand out life-changing sums to one half of the building while the other half received next to nothing.

Others had choice words for CEO and DX head TM Roh, saying that while he may receive a lot of bonuses this year, the benefits of Samsung Electronics' record operating profits won't trickle down to DX.

It's not lost on DX employees that some of the incredible performance of DS has come at their expense. They don't really get any preferential pricing for memory chips or chipsets, so DX faces the full impact of high prices and loses revenue while DS profits.

Some have said openly that the division should not be bound by internal sourcing obligations at all, that it should be free to source memory and components based on price competitiveness, the same way any independent manufacturer would.

There have already been indications that DX is looking beyond Samsung to source critical components. The Galaxy S26 series already has Micron as a major memory chip supplier. Qualcomm is still in play as a high-end chipset supplier. There were even rumors that the division could consider Chinese-made OLED panels for the base Galaxy S27 just to reduce the pressure on its margins.

That argument has a certain logic to it, though it runs into the obvious problem that Samsung Electronics as a whole benefits from the vertical integration that keeps DS customers captive.

This has been a feature of Samsung Electronics' business model for years, and it has worked well across cycles, particularly during the years when DS was struggling due to lack of interest in Samsung's foundry and a memory supply glut that pushed prices down. The DX division was relatively stable during that period and had better profitability.

Employees at DX would have reasonably expected that after the cycle reversed, and semiconductors outperform, they wouldn't be hung out to dry. However, the market conditions that DS is taking full advantage of right now are nothing short of a generational opportunity.

The demand supply gap is extreme and prices have blown through the roof with no end in sight. It's just pure capitalism to take every dollar available to DS even if that comes at an inherent disadvantage of the company's DX division.

It will be a big test for Samsung Electronics' management to ensure that morale doesn't take a hit across the entire organization. DX makes the products that billions of people around the world hold in their hands every day.

Samsung's global identity, the Galaxy brand, the televisions, the appliances, is the work of DX. That the people behind it posted a wreath on an internal message board says something about how that contribution is currently being valued.