Samsung Reportedly Considering Splitting Semiconductor DS Division into Independent Company to Weaken Union Bargaining Power
Amid soaring memory business profits and rising union sentiment, Samsung Electronics is reportedly discussing a "nuclear option" – splitting its Device Solutions (DS) division, which focuses on semiconductor business, into a completely new company to weaken the union's bargaining power at the group level. Reports indicate that as Samsung's storage business "money bag" rapidly expands, employees from other less profitable divisions have begun demanding simultaneous wage and bonus increases, causing strong dissatisfaction among management.
During a recent meeting with South Korean government officials, a Samsung attendee “casually” mentioned the split proposal, stating that the significant profit differences between Samsung Electronics’ various business divisions make it difficult to replicate the high semiconductor department salaries to business lines such as home appliances, which has become the focus of union pressure. However, the person also admitted that such a large-scale structural reorganization is likely to provoke strong backlash from shareholders, especially due to potential risks such as dilution of company value and a decline in overall group premium.
Currently, the Samsung union is confronting the company with an unprecedentedly strong stance. The union demands that approximately 15% of the company's annual operating profit, totaling about $30 billion, be used for bonus distribution, otherwise it will launch an 18-day strike starting May 21st, lasting until June 7th. This request is seen as “too radical” by management and is the core sticking point between the two sides.
To demonstrate its mobilization capabilities, the Samsung union held a large-scale rally on April 23rd, with approximately 40,000 participants. On the day of the rally, the output of Samsung’s highly automated memory factories was estimated to have decreased by about 18.4%, while the capacity of the wafer foundry production lines, which rely more on manual labor, plummeted by about 58.1%, causing a substantial impact on the company’s operations. Industry analysts point out that if routine equipment maintenance and upkeep are suspended for a prolonged period, the difficulty and cost of restoring production lines will rise sharply.
Estimates suggest that if the union implements the planned 18-day strike, it may take as long as 36 days for Samsung’s semiconductor production lines to return to normal levels, equivalent to “stopping work for 18 days and an additional 18 days to digest the recovery period,” putting multiple pressures on the DRAM and NAND supply chain. Previous analysis reports have warned that a prolonged strike could not only cause direct losses of billions of dollars but also exacerbate global storage chip price fluctuations.
Against this backdrop, Samsung’s senior management is reportedly in “full panic” and has begun seriously evaluating extreme solutions previously considered “impossible to use,” including the overall split of the DS division disclosed this time. Logically, once the high-profit semiconductor assets are spun off into an independent company, the influence and bargaining space of the union, which is currently attacking as a whole group, may be weakened. On the other hand, the spun-off semiconductor company may also have more autonomy in terms of compensation and incentive structures, reducing horizontal comparisons with other business divisions.
However, the tug-of-war between supporters and opponents is still in its early stages. On the one hand, management hopes to convey to the union that it “has cards to play” by releasing the “split” signal, and warn that an escalation of the strike may lead to irreversible group restructuring consequences. On the other hand, shareholders and some internal people worry that if Samsung, a representative Korean chaebol, truly begins to dismantle its core structure, it may trigger a re-evaluation of capital market valuations, a rewriting of governance structures, and a weakening of industrial synergy.
As of now, Samsung has not released an official statement regarding the rumors of the DS division split. However, with only a few weeks left before the union’s announced strike start date, the very sound of the “nuclear option” has become the latest variable in this battle over salary distribution and power.