(May 22): Samsung Electronics Co staved off a potentially catastrophic strike this week, reaching a tentative deal with leaders of its largest union at the last minute to share more profits from the artificial intelligence (AI) boom. But inside the US$1.1 trillion ($1.41 trillion) technology behemoth, not everyone is happy.
While some employees in the booming memory division stand to receive a bonus worth about 600 million won (US$400,000 or $510,000), those who make smartphones, TVs and home appliances are looking at payouts of just six million won. That 100-fold gap is fuelling intense resentment within Samsung over unequal rewards.
Workers are demanding a greater share of earnings as Samsung is on track to become one of the world’s most profitable firms by the end of the year. The Korean giant is the biggest supplier of the memory chips that go into everything from smartphones and electric vehicles to the AI data centre servers that power services like ChatGPT and Claude.
Leaders of Samsung’s largest labour union — where chip workers comprise almost 90% of the membership — believe they’ve secured a victory in wage negotiations. A tentative deal, agreed just 90 minutes before a work stoppage was due to begin, allocated 10.5% of the company’s operating profit as bonus in stock, with a further 1.5% in cash.
But employees in other units feel they were systematically excluded. Some have begun wearing black ribbons on their chests, a symbol typically reserved for mourning, in a display of distress over the deal, according to JTBC News.
“Samsung Electronics is one company,” said Lee Ho-seo, head of a smaller union made up mostly of workers in Samsung’s finished-product business division known as digital experience (DX). “We cooperated with each other and overcame crises whenever there was a crisis. But now that strong results have been achieved, saying that only the division where the performance occurred should take them (bonuses) makes no sense at all.”
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For decades, Samsung’s DX division, led by its smartphone unit, served as a financial safety net for the entire company. During the semiconductor division’s down-cycles, it faced losses due to high fixed costs of running fabrication plants and the volatility of memory prices.
When a severe memory glut hit in early 2023, the chip division reportedly borrowed 20 trillion won from Samsung’s display unit as it sought to maintain its aggressive investment in equipment and research.
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The profits from the popular Galaxy smartphone series allowed Samsung to keep building factories even when the chip unit wasn’t profitable, a strategy that eventually allowed them to crush competitors and ride the current boom.
But since the tentative deal for chip division employee bonuses was announced, the tides have turned inside Samsung. This week, a union representing the DX division filed a court injunction to try and stop the chip-dominated larger union from handling collective bargaining. Leaders of the smaller union are seeking to nullify the preliminary deal, arguing the largest union disproportionately favours the chip division at the expense of other units.
Members of Samsung’s largest union will get to vote on the pact through Wednesday, with a simple majority required for formal ratification.
The company is now eager to “put this period of conflict behind us” wrote Jun Young-hyun, Samsung’s chief executive officer for its semiconductor business, in an internal memo Thursday. He said that if the company could get back to “standing together on a foundation of mutual respect and trust, we can once again achieve a greater leap forward”.
But the proposed bonus deal may have inadvertently fractured the company’s workforce. The smaller union said its membership has surged from 3,000 before the proposal to nearly 13,000 as of Friday afternoon.
The division is also seen even within the semiconductor arm itself. Workers in loss-making units, such as foundry and system LSI, stand to receive significantly smaller bonuses than their memory colleagues due to performance allocation ratios. That’s driving claims of “unfairness” from those who provide technical groundwork essential for the memory division’s success.
“Union members, Samsung family members, we are one body, one family,” Samsung’s executive chairman Jay Y Lee said in rare public comments during the standoff. But an outpouring of discontent on Samsung internal messaging boards and public online forums indicates that many Samsung employees do not feel the same way.
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“This deal forces us to ask: do memory workers get the biggest slice because they’re more exceptional, or just because they’re in the right place during an AI revolution?” said Brandon Cho, CEO of semiconductor design company Semifive Inc.
“We’re living through an industrial shift on the scale of the 19th century. Figuring out how to share these extraordinary profits isn’t just a Samsung problem — it’s a global conversation.”
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