By Kim Yoo-chul
Employees at Samsung Electronics' telecommunications division, which mainly handles smartphones, may get less year-end bonuses than they've received in recent years as its key business has been struggling, according to sources Tuesday.
"There will be a significant cut in year-end bonuses of employees in Samsung's mobile division this year. It's too early to talk about how much," said a source, asking not to be named.
"Rumors suggest that they will be paid between 27 percent and 30 percent based on thei annual salaries," he said.
Korean companies often top up low salaries with bonuses. For example, Samsung Electronics pays employees up to 50 percent of their annual salary by sharing 20 percent of its profits that exceed targets.
Samsung said its profit sharing (PS) system is partly determined on the performance of each division. If profits in units, divisions, departments and factories are higher than the target, then part of them are paid out as bonuses.
This will be the first time in the past decade for Samsung's mobile division to miss the 50 percent ceiling.
Another source said as the company needs to complete accounting procedures such as economic value added (EVA), the exact amount of bonuses that will be given will be decided sometime in January next year.
In the past few years, Samsung's handset division has been performing well thanks to the on-time release of its premium smartphone models, benefitting employees at the division and the entire corporation.
Amid intense competition from Apple as well as cheap Chinese vendors such as Huawei and Xiaomi, Samsung has been losing its share in the global market.
While Samsung is trying to push the sales of its latest smartphones ― the Edge 6 Plus and Edge ― in key markets ahead of the year-end shopping season, it remains to be seen whether such aggressive marketing will pay off, said market analysts.
In tandem with the growing uncertainty, Samsung has been cutting the role of finance, public relations, administration and marketing offices. It is also working on fixed costs to make the handset division lighter.
In contrast, employees at the firm's memory chip division will end the year with the highest bonus profit, said the source.
Given that its smartphone issues run deep, Samsung is shifting its main focus to memory chips given the larger margins and its competitive advantages.
"There have been expectations that the memory division will exceed internal targets as the market has been reshaped with a few players led by Samsung. That means it can control the global supply growth in chips according to the situation, which is good for sustainability," said the source.
However he added that even with the company focusing more on chips, its smartphone business will remain of huge importance.
"With a better product mix-up between premium and budget phones, Samsung is trying to reinvigorate itself as a game changer."
Employees at Samsung Electronics' telecommunications division, which mainly handles smartphones, may get less year-end bonuses than they've received in recent years as its key business has been struggling, according to sources Tuesday.
"There will be a significant cut in year-end bonuses of employees in Samsung's mobile division this year. It's too early to talk about how much," said a source, asking not to be named.
"Rumors suggest that they will be paid between 27 percent and 30 percent based on thei annual salaries," he said.
Korean companies often top up low salaries with bonuses. For example, Samsung Electronics pays employees up to 50 percent of their annual salary by sharing 20 percent of its profits that exceed targets.
Samsung said its profit sharing (PS) system is partly determined on the performance of each division. If profits in units, divisions, departments and factories are higher than the target, then part of them are paid out as bonuses.
This will be the first time in the past decade for Samsung's mobile division to miss the 50 percent ceiling.
Another source said as the company needs to complete accounting procedures such as economic value added (EVA), the exact amount of bonuses that will be given will be decided sometime in January next year.
In the past few years, Samsung's handset division has been performing well thanks to the on-time release of its premium smartphone models, benefitting employees at the division and the entire corporation.
Amid intense competition from Apple as well as cheap Chinese vendors such as Huawei and Xiaomi, Samsung has been losing its share in the global market.
While Samsung is trying to push the sales of its latest smartphones ― the Edge 6 Plus and Edge ― in key markets ahead of the year-end shopping season, it remains to be seen whether such aggressive marketing will pay off, said market analysts.
In tandem with the growing uncertainty, Samsung has been cutting the role of finance, public relations, administration and marketing offices. It is also working on fixed costs to make the handset division lighter.
In contrast, employees at the firm's memory chip division will end the year with the highest bonus profit, said the source.
Given that its smartphone issues run deep, Samsung is shifting its main focus to memory chips given the larger margins and its competitive advantages.
"There have been expectations that the memory division will exceed internal targets as the market has been reshaped with a few players led by Samsung. That means it can control the global supply growth in chips according to the situation, which is good for sustainability," said the source.
However he added that even with the company focusing more on chips, its smartphone business will remain of huge importance.
"With a better product mix-up between premium and budget phones, Samsung is trying to reinvigorate itself as a game changer."
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