【Major Bank View】JPMorgan: If union demands are fully met, Samsung's 2026 operating profit could decline by 7% to 12%

Samsung Union (NSEU) announced an 18-day strike starting May 21, with labor negotiations still ongoing. JPMorgan pointed out that if all the union’s demands are accepted, Samsung (KOR: 005930) will incur an additional labor cost of 21 trillion to 39 trillion Korean won, and operating profit in 2026 could face a 7% to 12% downward risk, while semiconductor division revenue may be affected by about 1% to 2% due to production halts. JPM maintains a “Buy” rating on Samsung with a target price of 350k Korean won, citing the ongoing strength of the memory cycle.

Previously, the Samsung union demanded performance bonuses equivalent to 15% of operating profit, the removal of the 50% cap on performance bonuses, and a 7% increase in base salary.

In contrast, SK Hynix (KOR: 000660) reached an agreement with the union last September to distribute 10% of annual operating profit as bonuses to employees, avoiding strike risks.

Samsung CFO: Prioritize Dialogue to Resolve Labor Disputes

Over the past two years, SK Hynix’s per capita salary has been more than twice that of Samsung. Samsung allocates 11% of sales to employee compensation, while SK Hynix allocates 12.5%. JPMorgan analysis suggests that the difference stems from the employee size structure. Samsung has about 260k employees worldwide, with 60% working in the semiconductor division in Korea; SK Hynix has about 42k employees, all engaged in semiconductor business.

Samsung CFO Park Sooncheol stated that the company is handling labor issues in accordance with laws and regulations, prioritizing proper resolution through dialogue, and emphasized that even if a strike occurs, production disruptions will be minimized through dedicated teams and emergency mechanisms.

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