'Gloomy' Semiconductor Industry Faces Sharp Decline in Bonuses Due to Poor Performance

[Asia Economy Reporter Changhwan Lee] Last year, as the major companies in the semiconductor industry generally posted poor performance, the year-beginning bonuses also significantly decreased.

According to industry sources on the 1st, Samsung Electronics recently paid 22% to 38% of annual salary as the business division-specific Over Performance Incentive (OPI, formerly PS). OPI is Samsung’s bonus system that pays up to 50% of the annual salary within a 20% limit of profits exceeding the annual management target.

By business division, the Network Division received 38% of annual salary, the Visual Display Division 38%, the Semiconductor Division 29%, the Wireless Division 28%, and the Home Appliance Division 22%.

This year’s OPI significantly decreased compared to last year. Samsung Electronics achieved record-high performance in 2018 and paid the largest-ever OPI at the end of January last year. The Semiconductor Division received 50% of annual salary, while the Wireless, Visual Display, and Network Divisions received 46%. However, as last year’s performance declined, the current OPI payment amount was sharply reduced.

Samsung Electronics’ sales last year were 229.52 trillion KRW, and operating profit was 27.71 trillion KRW, down 5.8% and 52.9% respectively from the previous year. The annual operating profit falling to the 20 trillion KRW range is the lowest performance in four years, since 2015. The main reason was the semiconductor business, which contributed to the record performance, suffering due to a drop in DRAM prices.

SK Hynix also decided to skip performance bonuses this year. SK Hynix, which achieved strong results due to the semiconductor boom in 2018, paid performance bonuses amounting to 1700% of the base salary early last year.

However, SK Hynix’s operating profit last year was 2.7127 trillion KRW, a sharp 87% decrease from the previous year. This is the lowest operating profit in seven years since the deficit in 2012. During the same period, sales dropped 33.3% to 26.9907 trillion KRW.

Nonetheless, this year SK Hynix decided to pay a special contribution bonus equivalent to 400% of the base salary to its employees. SK Hynix stated, "Despite the deterioration in business performance, we achieved visible results such as technological advancement, successful investment in facilities, and establishment of a safety culture," and added, "We will pay a 'Future Growth Special Contribution Bonus' of 400% of the base salary on the 31st in recognition of employees’ contributions."

This content was produced with the assistance of AI translation services.