[E-Daily Reporter JAEMIN SONG ] SamsungElectronics’ Device Experience (DX) Division is overcoming the decline in profitability caused by soaring memory prices by expanding market share and improving operational efficiency. Since competitors are facing the same cost pressures, the company’s strategy is to increase sales volume by leveraging product competitiveness and secure greater market dominance once memory prices stabilize.

According to industry sources on the 19th, SamsungElectronics held a briefing on the company’s current business status for executives and employees the previous day, led by CEO and Head of the DX Division Noh Tae-moon, to share recent financial results and business strategies for the second half of the year.

The DX Division’s revenue for the first half of this year increased by about 2% compared to the same period last year, but fell short of the market growth rate. Operating profit fell by about 74%, from 8 trillion won in the first half of last year to 2.1 trillion won this year. The company explained that while it pursued measures to reduce material costs, expand sales, and improve cost efficiency, it was unable to offset the impact of memory prices, which rose more than fourfold year-over-year.

The cost burden is growing even further as the capacity of semiconductors embedded in smartphones, TVs, and home appliances increases due to the expansion of artificial intelligence (AI) capabilities. According to market research firm TrendForce, contract prices for LPDDR5X—a type of mobile DRAM—rose by 78–83% in the second quarter of this year compared to the previous quarter. It was also found that semiconductors now account for approximately 45% of the total cost of a smartphone.

SamsungElectronics assessed that the high-cost structure resulting from rising memory prices applies equally to its competitors. While some competitors are raising prices for new products or reducing production and order volumes for entry-level models, SamsungElectronics plans to boost its market share by expanding sales of the Galaxy S26 and Galaxy Z Fold 8 series. The company is also pursuing profitability improvements in parallel, including cost reduction and efficiency measures.

Although the same rise in memory prices has opposing effects on the two divisions, their performance and compensation are managed separately. To address concerns that technology and product information from component customers could leak into the finished products division, SamsungElectronics has operated DX and DS under a divisional system—effectively treating them as separate companies—since 2009. This measure was implemented to block the exchange of information between the two divisions, recognizing that companies competing with SamsungElectronics in the finished products market could also be its customers in the semiconductor business.

This principle of independent operation also applies to management support areas such as human resources, finance, and accounting. DX and DS each manage their own balance sheets and income statements, and when one division utilizes funds from the other, they settle the transaction by reflecting interest. It is reported that funds from the DX division invested in the DS division during the semiconductor downturn were later settled with interest added.

Performance bonuses are also paid based on each division’s performance. While the MX Business Division received 44–50% of its 2023–2024 annual salary as an Over-Profit Incentive (OPI) due to strong performance, the DS Division’s payout rate ranged from 0 to 14%, reflecting this principle of independent accounting.

However, even as the company emphasizes linking division-specific performance to compensation, there continues to be backlash within the DX Division regarding compensation levels. The SamsungElectronics Labor Union Donghaeng (Donghaeng Union)—the largest union in the DX Division—plans to hold a large-scale rally on the afternoon of the 21st near the SamsungElectronics Seocho Building in Seocho-gu, Seoul. The union expects approximately 3,000 people to attend.

The Donghaeng Union argues that even after the labor-management wage negotiations were settled last May, the compensation received by DX division employees remains excessively low compared to that of the DS division. Consequently, the union is demanding that the company implement a compensation plan that includes approximately 1,000 shares of company stock per DX division employee.