[비즈한국] Back in 2019, Samsung Electronics Chairman Lee Jae-yong identified 'system semiconductors' as a future growth engine. Declaring a commitment to strengthening the competitiveness of the domestic system semiconductor ecosystem, he announced plans to expand cooperation with domestic fabless (semiconductor design) and DSP (Design Solution Partner) firms. He unveiled 'Semiconductor Vision 2030' with the long-term goal of becoming the global leader in the system semiconductor field by 2030, pledging to invest 133 trillion won over 10 years to achieve this.
A, who joined Samsung Electronics' system semiconductor division as a new recruit in 2022, remembers an atmosphere of "let's give it a shot" in the team when he first joined. Recently, however, that team spirit has completely collapsed. According to A, the exodus of personnel who moved from the memory business to the non-memory business in line with the 2019 'Semiconductor Vision 2030' is becoming prominent. Out of about 10 team members, 2 to 3 have already left for competitors like SK Hynix, and another 2 to 3 are considering pursuing graduate studies.
The trigger for this rush to leave is the controversy over 'performance bonuses.' As it became expected that their bonuses would be significantly lower compared to the memory semiconductor (DS division) staff, more employees are looking for their futures outside the company. A confessed, “I am also considering going to graduate school in the U.S. to build up my credentials before trying to find a job in the semiconductor field again. The people currently working in the system semiconductor sector have completely lost their motivation to work.”
Dreaming of a Comprehensive Semiconductor Powerhouse, but Shaken by Performance-Based Principles
From memory and system semiconductors to foundry (contract manufacturing) and advanced packaging, Samsung Electronics is the world’s only semiconductor company with comprehensive production capabilities. Chairman Lee Jae-yong’s 2019 decision to pick system semiconductors as a 'future growth engine' was also aimed at securing leadership in the artificial intelligence (AI) chip market by increasing 'turnkey' capabilities.
However, this strategy is being shaken by compensation disparities based on performance-based principles. Divisions over the distribution of performance bonuses are undermining the 'One Team' spirit.
The core of the tentative agreement on performance bonuses between Samsung Electronics' management and labor is to differentially pay 10.5% of business performance as a special management incentive, in addition to the existing Overall Performance Incentive (OPI), to the semiconductor (DS) division, which achieved record-breaking results. Under these terms, employees in the memory business unit are set to receive performance bonuses in the 600 million won range, including OPI. However, even within the same DS division, the foundry and System LSI business units are expected to receive only around 150 million won. This is because, as areas Samsung Electronics has only recently entered, their 'results' are lacking.
The system semiconductor foundry division requires massive investments in advanced processes. While the goal was to reach global number one by 2030, the market share gap with industry leader TSMC of Taiwan has widened to 60 percentage points.
According to Counterpoint Research, TSMC held a 73% market share by revenue in the global pure-play foundry market in the first quarter of this year, while Samsung Electronics placed second at 7%. Even this position is being threatened by Intel, which has launched aggressive investments. While securing large-scale clients in the 2nm and 3nm processes to increase utilization rates is urgent, achievements in securing global clients remain sluggish due to focusing on producing internal volumes.
Soaring Memory vs. Sluggish System
Semiconductor export indicators also show no signs of a "future." Last July, semiconductor exports recorded $41.02 billion (58 trillion won), an increase of 178.8% compared to the same month last year. While memory semiconductor exports surged by 276.9%, system semiconductor exports fell by 0.7%. Even as memory semiconductor prices have skyrocketed, system semiconductor prices are seeing a slight decline.
Samsung Electronics says it will speed up business expansion by starting operations at its Taylor, U.S. fab in the fourth quarter of this year, but it is certain that the division will remain in the red until this year, with potential for a turnaround to profit early next year at the earliest. This is why there are complaints that it is difficult to expect "hundreds of millions of won in performance bonuses" for several years to come.
A Samsung Electronics mobile division employee said, “Excluding memory semiconductors, there is no field where we expect performance to improve over the next 2 to 3 years,” adding, “People are increasingly wanting to quit the company, asking why they only prioritize memory for bonuses when the company has been using profits from elsewhere to cover semiconductor losses.”
A business industry official pointed out, “If a performance bonus system buried in short-term results takes root, conflicts between business areas will arise, and no one will want to work in departments preparing for the future.”