Samsung's chip division head calls for teamwork to achieve goal amid standoff with union

Industry

Samsung's chip division head calls for teamwork to achieve goal amid standoff with union

Published: 01 Aug. 2024, 16:03

JIN EUN-SOO
jin.eunsoo@joongang.co.kr

The National Samsung Electronics Union holds a press conference in front of Samsung Electronics Executive Chairman Lee Jae-yong's residence in central Seoul on Thursday. [NEWS1]

Jun Young-hyun, head of Samsung Electronics' chip business, said Thursday that he expects higher incentives this year amid stalled wage negotiations with the company's union.

It was Jun's first official message to the employees of the Device Solutions (DS) division, Samsung's chip business, since his surprise midyear appointment to the post in May.

"As announced earlier, if we hit our target operating profit of 11.5 trillion won [$8.4 billion] this year, the OPI [overall performance incentive] rate will be from 0 to 3 percent. But as the industry is on an upturn and profitability is improving, if we all work hard for it, the OPI rate will be higher than what was estimated earlier this year," Jun said in the message.

The DS division achieved 8.4 trillion won in operating profit in the first half of the year alone, and an even steeper upward trajectory is expected when AI chip demand goes into full swing.

Jun heralded an overhaul in organizational culture to achieve a fundamental breakthrough, decrying a lack of communication between leaders and teams.

"Improvements in the second quarter earnings is not because we recovered our competitiveness but because of the cyclical upturn," he said.

"Without a fundamental recovery in competitiveness while continuing to rely on market conditions, we will again repeat the vicious cycle that happened last year."

Jun underscored the need for more flexible communication within the organization.

"We need to fortify communication between leaders and teams to eliminate the barrier to better communication," he said.

"Regardless of title and rank, we need to clearly admit what can be done and what cannot be done and rebuild the distinctive discussion culture of the chip division."

Samsung Electronics Vice Chairman Jun Young-hyun [SAMSUNG ELECTRONICS]

Jun suggested a "C.O.R.E" organizational culture — standing for "communicate," "openly discuss," "reveal" and "execute."

"We are in a difficult situation but I have no doubt that we can overcome it by quickly recovering competitiveness through our distinctive communication and discussion culture as well as accumulated research experience and know-how."

Jun's message comes amid stalled talks between the management of the DS division and its labor union over compensation.

After failing to come to an agreement in three days of intensive talks early this week, the National Samsung Electronics Union, which represents 24 percent of the company's workforce, held a press conference in front of Samsung Electronics Executive Chairman Lee Jae-yong's residence in central Seoul.

"It's time for Chairman Lee to step in and disclose his stance in order to resolve the strike," the union said Thursday.

Lee is currently on a business trip to Europe.

"We want a clearer incentive system so that the amount can be predicted beforehand as well as an additional 0.5 percent point raise. That is equivalent to 34,000 won per month, meaning we are not asking for more money but just want recognition for what we've contributed to the company."

The union is asking for 5.6 percent raise, while management is pushing for 5.1 percent.

The union is also asking for 2 million won in points that can be used like cash on an internal shopping platform, while management is proposing 500,000 points.

BY JIN EUN-SOO [jin.eunsoo@joongang.co.kr]