Labor-management profit-sharing talks stall! Samsung union is preparing a major strike, JPMorgan Chase: revenue could evaporate by 4 trillion won

Korean tech giant Samsung Electronics has recently posted record results amid the AI boom, but has now landed in a labor-management dispute. Dissatisfied with the company’s profit-sharing approach, the Samsung union warned that if the investor group does not raise wages and institutionalize the bonus system, it will launch a strike lasting 18 days starting May 21. If it happens, it could disrupt global memory and foundry supply chains, prompting attention from and intervention by the South Korean government to mediate.

Profit-sharing terms require matching SK Hynix; labor talks may break down

According to a report by the Financial Times, surging demand from AI companies for advanced chips required by data centers—such as high-bandwidth memory (HBM)—has significantly boosted Samsung Electronics’ operating performance. Samsung’s stock price has jumped more than 14%, and its market value has also surpassed the $1 trillion mark. Net profit in the first quarter of this year reached 47.2 trillion won (about $32.6 billion), nearly six times the figure from the same period last year, with the vast majority of gains coming from the semiconductor division.

Insiders said Samsung’s management has proposed setting aside about 13% of operating profit as a bonus, equivalent to roughly $340k per employee. However, this bonus would only be paid once. The union wants it incorporated into the agreement and is also seeking assurances that bonuses will be paid every year.

The Samsung union argues that SK Hynix employees can receive about $477k in bonuses this year based on profit-sharing, and that next year it could likely approach $900k. The profit-sharing system would also be guaranteed for ten years. Conditions originally proposed by the union include: using 15% of operating profit from the semiconductor division for bonuses, removing a 50% cap on bonuses, and raising wages by 7%. The investor side previously offered a 10% allocation, a 6.2% wage increase, and other benefits. If the two sides continue to fail to reach an agreement, the union plans to begin an 18-day strike action starting May 21.

Strike could hit the global memory supply chain! Samsung may lose Nvidia’s big order

Recently, AI companies have been signing long-term contracts with chip manufacturers, driving up procurement prices for other customers such as consumer electronics. Samsung is currently actively developing its foundry business and is also aiming to become a reliable supplier of Nvidia’s HBM4 chips, so a strike could seriously damage customer trust.

In addition, the strike would create a ripple effect, affecting 1,700 upstream suppliers to Samsung. According to an estimate by the Bank of Korea, in South Korea’s first-quarter economic growth rate of 1.7%, about half is attributable to chip manufacturing. Samsung and its competitor SK Hynix together account for more than 40% of the weighting in South Korea’s composite stock price index (Kospi), making the potential impact on the overall Korean economy enormous.

South Korea’s Ministry of Employment steps in urgently to coordinate; JPMorgan assesses Samsung’s capacity and revenue impact

The South Korean minister of employment urged both labor and management to show mutual understanding. Samsung’s achievements, the minister said, rely not only on employees’ efforts, but also on support from the government, cooperation partners, and coordination from local residents, and hopes the two sides can begin sincere dialogue as soon as possible. To that end, the Ministry of Employment held a tripartite meeting on the 8th to mediate.

Regarding potential financial and capacity impacts from the strike, JPMorgan in its newly released report estimates that if wafer fabrication lines are halted for 18 days due to the strike, it would affect full-year DRAM output by 0.9%, NAND flash output by 0.5%, and foundry output by 2.4%. Revenue losses could exceed 4 trillion won (about $2.76 billion).

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