[THE INVESTOR] Having posted record profits in the chip sector this year, Samsung Electronics plans to hand out generous bonuses to its employees at the semiconductor business, according to news reports on Nov. 15.
The tech giant, one of the largest chip producers in the world, reportedly plans to offer a special bonus close to 400 percent of the monthly salary.
The incentives come as the components arm has been making sizeable contributions, and is anticipated to post record earnings this year. The tech giant's entire revenue and operating income are expected to reach 240 trillion won (US$215.10 billion) and 50 trillion won, respectively, thanks mainly to the robust chip and smartphone businesses.
In the third quarter alone, the chip unit’s operating income accounted for some 70 percent of the overall operating profit, which stood at 14.53 trillion won.
The special bonus will be given on top of the overall performance incentive, an annual bonus given to employees in the first month of each year based on their performance. This move is, however, triggering some concerns across the industry as to whether Samsung can afford to cover such growing expenses.
An employee can receive up to 50 percent of the annual salary via the OPI reward program, while those above the managerial level are given up to 70 percent of their annual salary.
Samsung offered the maximum amount of OPI to its employees in the chip unit early this year after earning an operating profit of 29.2 trillion won, up 10.7 percent from 2015.
The latest incentive program, if carried out, will be the first of its kind in four years.
Samsung’s previous plan to provide a one-time bonus to semiconductor employees in the third quarter was aborted as celebrating the record profits amid a leadership vacuum was deemed inappropriate by the management. Chairman Lee Kun-hee has been hospitalized since 2014 due to a heart attack, while his son and heir Lee Jae-yong was imprisoned for bribery in February.
By Kim Young-won (firstname.lastname@example.org