Samsung Electronics shares fell as much as 4.4% after the company and its largest labor union failed to reach an agreement in mediation talks in Sejong. The union plans to begin a general strike on May 21 after management rejected a proposal already accepted by workers. The union is seeking the removal of a bonus cap and wants bonuses set at 15% of operating profit with the terms written into labor contracts, while Samsung said the demands were excessive and instead offered bonuses equal to 10% of operating profit along with a one-time payment after accepting most other requests. Samsung's significance as the world's largest memory chipmaker has drawn broader market attention to the dispute, particularly as South Korea has previously used emergency arbitration to halt major strikes.
Bonus Dispute: Union vs. Samsung Demands
The union's push for 15% of operating profit in bonuses comes to approximately 45 trillion won (US$30.4 billion)—more than four times the 11.1 trillion won (US$7.5 billion) paid in shareholder dividends last year. Samsung employees received no performance bonus in 2024.
Samsung's counter-offer of 10% of operating profit plus a one-time payment represents the company's position that the union's demands are excessive. Management accepted most other requests from the union before rejecting the bonus proposal.
SK Hynix Deal Raises Benchmark
The union's position is shaped by a competitive agreement at SK Hynix, a South Korean memory chipmaker that set aside 10% of annual operating profit for employee bonuses over the next decade and removed bonus caps. That arrangement works out to average payouts of US$460,000 to US$477,000 per worker this year, with estimates nearing US$900,000 next year.
Approximately 200 Samsung workers have left for SK Hynix over the past four months, underscoring the competitive pressure on Samsung's workforce.
Supply Chain Pressure: HBM and AI Chips
Samsung is one of three companies in the world that makes High Bandwidth Memory (HBM), an advanced memory chip used to run AI systems. A strike would slow production at Samsung's South Korea chip plants, creating a bottleneck in AI hardware supply. A previous one-day walkout cut contract chipmaking output by 58% and memory chip production by 18% during the affected shift.
The memory market is already tight. Apple held emergency meetings with Samsung's chip division and accepted an opening demand for a 100% price increase to secure memory for iPhone 17 production.
Internal Union Fragmentation
The dispute is stirring friction inside Samsung. A smaller union made up mostly of workers in smartphones, TVs, and home appliances has pulled out of the planned joint strike.
