Samsung Electronics to freeze chip biz executives’ wages

[Image source: Gettyimagesbank]

Executives at Samsung Electronics Co.’s Device Solutions (DS) division have decided to freeze wages after the division responsible for chip business posted record losses last year.

The decision was made during an emergency meeting on Wednesday, attended by DS division executives and management.

“There is a consensus that it is an urgent time to devise measures to address the deterioration in performance and take active steps,” said an unnamed official from the company.

Last year, Samsung Electronics conceded its position as the global leader in semiconductors to Intel Corp.

According to market research firm Gartner, Samsung Electronics recorded chip sales of $39.95 billion last year, down 37.5 percent from the previous year, accounting for a market share of 7.5 percent. Intel, which also saw a 16.7 percent decrease in sales last year, managed to reverse its market share to 9.1 percent, surpassing Samsung Electronics after two years.

Amid the industry-wide challenges last year, the sales decline at Samsung Electronics, which focuses on memory chips, was impacted harder by economic conditions compared to system chip-focused Intel. While global semiconductor sales decreased by 11.1 percent to $533 billion, memory chip sales saw a 37 percent.

By category, DRAM sales fell by 38.5 percent to $48.4 billion, and NAND flash sales decreased by 37.5 percent to $36.2 billion. Non-memory, or system chip sales, fell 3 percent from the previous year.

The overall uncertainty surrounding the chip industry is also growing in line with the increasing U.S.-China tension for chip dominance, coupled with the potential escalation of conflicts following the U.S. presidential election in November.

With intensifying global competition to dominate the chip industry, countries are pouring in support, turning the semiconductor sector into a national battleground.

The U.S. provides support for the chip industry with $52.7 billion under domestic law. In December, U.K. defense company BAE Systems Plc, which operates a factory in New Hampshire, received U.S. subsidies, followed by Microchip Technology Inc. receiving the second round of subsidies earlier this month.

Japan also provided 476 billion yen in support ($3.2 billion) to Taiwan Semiconductor Manufacturing Co. (TSMC), covering 46 percent of the costs for the Taiwanese chipmaker in constructing its first factory in Kumamoto Prefecture.