Editors Note: This is the first of a two-part AJP series examining the side effects of the chip bonanza, starting with the widening fault lines inside Samsung Electronics.
SEOUL, September 17 (AJP) - A few decades ago, every Samsung office had corporate slogans from founder Lee Byung-chull hanging on the wall. One read: "Men make business." Lee prided himself on having devoted 80 percent of his life to finding and cultivating talent.
The creed ran through the spine of Samsung across three generations. Samsung has never been richer or more powerful, yet its people have rarely been so divided under the watch of Lee's grandson, Lee Jae-yong.
Samsung Electronics Labor Union Donghaeng, representing workers in the company's once-hallmark home appliance and smartphone businesses, will launch an open-ended protest Friday near Lee's residence in Hannam-dong, central Seoul, over what it sees as pay injustice during the chip heyday.
The relay of one-person protests will continue until its demands are met, the union says.
Donghaeng wants 1,000 Samsung Electronics shares for each employee in the Device eXperience (DX) division, the creation of a companywide pool funded by a portion of corporate performance and a uniform base-pay increase rate across divisions.
The dispute has grown beyond a disagreement over this year's compensation. It is increasingly reshaping Samsung's union landscape along the fault line between its semiconductor and consumer businesses.
At the center of the divide is a wage agreement reached in May.
Under the agreement, Samsung introduced a special performance bonus for its Device Solutions (DS) division, which houses its semiconductor operations, funded by 10.5 percent of the division's business performance.
Employees in DX, which oversees smartphones, televisions and home appliances, were offered company shares worth about 6 million won ($4,300) each on top of the existing compensation system.
The disparity triggered a backlash among some DX employees and raised a broader question over Samsung's practice of tying compensation closely to the performance of individual businesses when employees ultimately work for the same company.
The tension has become particularly pronounced as Samsung's semiconductor earnings have surged to unprecedented levels with the AI boom, leaving its non-chip businesses relatively behind.
A former Samsung Electronics employee, who requested anonymity, said differences in performance bonuses between business units were nothing new.
In the past, employees largely accepted them because bonuses reflected the performance of their respective businesses and payouts were capped at 50 percent of annual salary, the former employee said.
"When one business did well, people generally accepted that employees there would receive more," the person said.
What has changed is the sheer scale of the money now at stake.
"As the amounts have become much larger, the structure itself makes conflict difficult to avoid," the person said.
The problem is particularly acute inside Samsung's semiconductor operations, where employees can be assigned or transferred among businesses including memory, System LSI and foundry.
"Imagine how uncomfortable it can be in the elevator of a chip building when compensation can differ by hundreds of millions of won per person depending on which floor they work on," said another former Samsung Electronics employee.
Employees may perform broadly similar work but receive substantially different compensation depending on the fortunes of the business unit to which they happen to belong.
"If these were completely separate companies from the beginning, it might be different," the first former employee said.
"But employees can move from memory to System LSI and between different organizations. When the difference becomes this large simply because of where someone happens to be at a particular point in time, there will inevitably be people who feel unfairly treated."
The growing stakes are now visible in Samsung's union membership.
Donghaeng had only about 2,600 members around the time the wage agreement was reached in May. Its membership has since surged, with recent reports putting the figure at around 30,000, making it Samsung Electronics' second-largest union.
Samsung's largest union, the Samsung Group Super Enterprise Union's Samsung Electronics branch, has moved in the opposite direction.
The union briefly exceeded 76,000 members and secured majority-union status earlier this year, but its membership has since declined.
Its composition has changed even more dramatically.
According to internal union data reported by local media, DX employees accounted for 28.1 percent of its membership at the end of March. By the end of August, their share had fallen to around 1 percent.
The union is now pursuing a restructuring centered on Samsung's DS division and is considering limiting future membership to semiconductor employees.
The shift shows how differences in business performance and compensation are increasingly shaping the way Samsung employees organize themselves.
The split has also spilled outside the company.
About 7,000 people attended a Donghaeng rally outside Samsung's Suwon campus on July 16, according to organizers, demanding that management address the compensation disparity.
The union staged another protest near Samsung's Seocho headquarters in August.
Friday's demonstration takes the campaign a step further, moving the dispute from Samsung workplaces to the vicinity of Lee's private residence.
But Samsung's labor divisions are becoming more complicated than a simple DS-versus-DX split.
Within the semiconductor division itself, employees in the foundry and System LSI businesses have raised concerns about compensation gaps with the highly profitable memory business.
Samsung's largest union has signaled that improving performance-pay rules for employees in loss-making semiconductor operations will be among the issues it pursues in future negotiations.
The former Samsung employee said this intra-division gap could be particularly difficult to accept because placement in a particular semiconductor business is not always entirely an employee's choice.
New hires, for example, may be assigned to memory, System LSI or foundry while doing broadly comparable engineering work.
That was less contentious when the potential difference in compensation was smaller.
"In the past, even if there was a difference, people tended to think, 'That business did well, so they received more,'" the former employee said. "The situation changes when the absolute amount becomes much larger."
The changing compensation landscape is also affecting the competition for engineering talent.
The former Samsung employee recalled that Samsung itself had used compensation aggressively to attract overseas engineers during an earlier period of semiconductor expansion in the 2000s, offering competitive packages to lure experienced workers to Korea.
"Compensation is probably the strongest advertisement when it comes to recruiting good people," the person said.
The observation comes as Samsung competes with SK hynix for semiconductor engineers during an unprecedented AI-driven memory boom.
Meanwhile, tensions within Samsung's largest union have intensified.
Members are voting on a proposed DS-focused restructuring alongside no-confidence motions targeting two union officials.
Union Chairman Choi Seung-ho has separately faced scrutiny over purchases of rally supplies from a company operated by his father-in-law.
Choi has acknowledged the family relationship but said the supplier was selected after considering price, quality and delivery schedules. He denied providing improper financial benefits to himself or relatives.
A separate criminal case has further strained relations among Samsung's unions.
Police earlier this month referred Choi and another union official to prosecutors on suspicion of violating the Personal Information Protection Act in connection with personal information involving more than 100,000 Samsung employees.
The case has prompted competing petition campaigns.
Donghaeng has collected more than 15,000 signatures seeking strict punishment, while Samsung's largest union this week began seeking up to 30,000 signatures asking authorities for leniency for Choi and another official.
The latter has budgeted about 20 million won ($14,000) in union funds for the electronic petition campaign, prompting internal questions over the use of membership dues.
The developments mark a sharp turn from earlier this year, when Samsung's major unions joined forces in wage negotiations with management.
The dispute is now unfolding on several fronts — between labor and management, between unions representing employees with different compensation interests and, increasingly, within the unions themselves.
Donghaeng Union has borrowed Samsung's founding creed in an ad it has been running on a Times Square billboard since early this month.
It is not just a protest, but a reminder of what the company was built on — and what it risks losing if widening divisions among its own people are left unattended.
AJP Takeaways
- Samsung's chip boom is widening compensation gaps between its semiconductor and consumer electronics employees.
- The divide is reshaping Samsung's labor landscape, with unions increasingly organizing around different business and compensation interests.
- The dispute is spreading within the chip division itself, raising questions over whether Samsung's performance-based pay system remains sustainable as payouts surge.
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