On May 13, after the second round of post-mediation negotiations between Samsung Electronics and its labor union ultimately broke down, the union announced that it would proceed as planned with a general strike.
This could be the largest and longest work stoppage since Samsung was founded in 1969.
According to an email statement, Samsung Electronics expressed regret over the union's announcement that bonus payment negotiations had collapsed, but emphasized that it would continue to make efforts to negotiate with the union to prevent the worst-case scenario.
Affected by the news, Samsung's stock price fell more than 6% at one point before edging up 1.3% as of press time.
The report noted that from 10 a.m. on May 12 to 3 a.m. on May 13 local time, Samsung Electronics and its national labor union held 17 hours of negotiations, but the two sides failed to narrow their differences over bonus payments.
Earlier, two Samsung unions demanded that the company pay employees an amount equivalent to 15% of each division's operating profit and raise wages by 7%. They threatened to hold an 18-day strike starting May 21 if their demands were not met. So far, 41,000 union members have indicated their intention to participate in the strike, but given management's attitude during negotiations, the number could increase to more than 50,000.
The root cause of the crisis lies in the uneven distribution of profits from the AI boom and a significant wage gap compared to industry peers.
In the first quarter of 2026, Samsung reported its "strongest ever earnings," with revenue of 133.9 trillion won, a 69% year-on-year increase, and operating profit of 57.2 trillion won, a staggering 756% surge, surpassing the total for all of 2025. The semiconductor business alone contributed 53.7 trillion won in profit, accounting for more than 93%, while HBM revenue more than tripled year-on-year, and market capitalization briefly exceeded $1 trillion.
Amid soaring profits, employees have become deeply dissatisfied with compensation, with the main point of contention centered on the performance bonus system. In response to the union's proposed pay hike plan, Samsung has only agreed to award bonuses equivalent to 10% of operating profit, along with a one-time special compensation, while refusing to institutionalize the plan on a long-term basis.
Meanwhile, SK Hynix, another South Korean memory chip giant, has also seen its performance surge thanks to HBM orders, reporting an operating profit of 37.6 trillion won in the first quarter of 2026. Last September, SK Hynix reached a historic labor agreement with its union, abolishing the previous cap that limited profit-sharing payouts to no more than ten times base salary, and replacing it with a system that puts 10% of annual operating profit into a bonus pool. Based on this, the company's more than 30,000 employees would receive an average bonus of 140 million won.
Although SK Hynix has emphasized that the bonus amount cannot be predicted because annual performance for this year and next has yet to be determined, the already established bonus system has indirectly intensified the conflict between Samsung employees and the company.
Under the mediation of the Central Labor Commission under South Korea's Ministry of Employment and Labor, Samsung Electronics and its labor union held negotiations from February to March but ultimately failed to reach an agreement, leading to the suspension of mediation. Subsequently, the Central Labor Commission initiated follow-up mediation procedures, and the two sides held a first and second round of mediation on May 11 and the following day, respectively, but these ultimately fell through.
The government's anxiety stems from Samsung's critical importance to the South Korean economy. As of 2024, Samsung Electronics had 1,061 primary partner companies and 693 secondary and tertiary partner companies. If the 18-day strike proceeds as planned, both Samsung and the South Korean economy could face a double blow.
In terms of direct losses, a professor at Sungkyunkwan University in Seoul estimates that the strike could cause Samsung direct losses of 10 to 17 trillion won, but "the greater losses are indirect." According to reports, if the strike actually occurs, the South Korean tech giant could lose as much as 30 trillion won.
Previously, JPMorgan noted that the ultimate impact on earnings would depend on the duration of the strike and the outcome of negotiations. If the union's demands are fully met, Samsung's 2026 operating profit could face a downside risk of 7% to 12%, and approximately 1% to 2% of semiconductor division revenue could be lost due to production halts.
Samsung is responsible for a large portion of global memory chip production capacity. A strike could disrupt the supply of DRAM, NAND, and HBM chips, potentially driving key customers such as Apple and Nvidia toward SK Hynix and Micron, leading to irreversible market share loss for Samsung.
South Korean Finance Minister Koo Yun-cheol expressed "deep regret" over the breakdown of negotiations. In a post on social media, he said, "A strike must be avoided at all costs," and added that the government would "provide unwavering support until the very end."
(Source: Jiemian.com)
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