(May 13): Samsung Electronics Co failed to reach a last-minute wage agreement with its largest labour union, heightening the risk of a strike that could disrupt operations at the world’s largest memory chipmaker.
The breakdown in talks came after two days of marathon negotiations mediated by South Korean labour authorities. Both sides remain sharply divided over the size of bonuses tied to booming AI-related earnings. The union has demanded that Samsung scrap an existing bonus cap, allocate 15% of its operating profit to worker bonuses and formalise those terms in employment contracts. The company’s shares fell as much as 6.1% in Seoul.
The failed talks underscore rising tensions across the country as workers push for a greater share of profits generated by the AI infrastructure boom. Union leaders have pointed to rival SK Hynix Inc, which last year agreed to allocate 10% of annual operating profit to a performance bonus pool. On Tuesday, a Korean policymaker rattled markets when he proposed sharing excess taxes on AI profits via a “citizen dividend", highlighting the growing debate surrounding a historic industry boom.
The union has threatened an 18-day strike beginning May 21, raising concerns over potential disruptions to Samsung’s semiconductor operations at a time when it competes fiercely with SK Hynix and Micron Technology Inc in the memory market. A prolonged labour dispute could complicate Samsung’s efforts to accelerate development of next-generation semiconductors.
Samsung has proposed allocating 10% of operating profit to bonuses, along with a one-time special compensation package that exceeds industry standards. Company executives argued that the union’s demands would be difficult to sustain over the long term.
On Tuesday, the two sides came together for 12 hours of negotiations. But the mediated proposal was seen as a “step backward", the union said in a statement.
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A representative of Samsung said it will continue its efforts to prevent a worst-case scenario. The National Labour Relations Commission said in a statement that it will provide further post-mediation support should both labour and management request it.
South Korean Finance Minister Koo Yun Cheol on Wednesday urged the two sides to continue to negotiate. “A strike must be avoided at all costs,” he said, promising government support.
Any production halts at Samsung could ripple through the global technology supply chain.
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“There are mounting concerns that any significant production disruptions or operational uncertainty at Samsung Electronics could place additional strain on the global memory semiconductor market, potentially worsening supply bottlenecks, price volatility, procurement uncertainty and broader supply chain instability,” the American Chamber of Commerce in Korea said in a statement this week.
Investors are also monitoring Samsung’s efforts to seek an injunction to restrict the planned strike.
The Suwon District Court is expected to rule on Samsung’s injunction request by May 20. The injunction seeks to ban strikers from occupying key facilities and mandate that safety-critical staff remain on-site to prevent equipment damage, potentially altering the scope of the May 21 walkout.
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