Citi warns Samsung earnings may fall on strike, bonuses

Citigroup said Samsung Electronics could face near-term pressure on earnings as labor tensions rise, with a possible strike from May 21 to June 7 and higher costs weighing on profit.

An analyst kept a buy rating but cut his target price to 300,000 won (US$200) from 320,000 won (US$220), citing concern that Samsung may need to book sizable performance bonus provisions.

That could lower Samsung’s 2026 and 2027 operating profit forecasts by 10% to 11%, while other risks include delays to HBM4 approvals, tougher memory and foundry pricing.

Samsung’s labor union is seeking removal of caps on performance bonuses and payouts equal to 15% of operating profit, or about 45 trillion won (US$30.6 billion).

🔗 Source: The Korea Herald

🧠 Food for thought

Implications, context, and why it matters.

The union’s demands clash with Samsung’s spending plans

The request for 45 trillion won (US$30.3 billion) goes far beyond a pay fight. It is higher than the 37.7 trillion won (US$25.6 billion) Samsung spent on research and development in 2025 1.
The figure is also about four times the 11.1 trillion won (US$7.55 billion) paid in dividends to 4.2 million shareholders. That puts worker pay, company spending, and investor payouts in direct tension 1.
The campaign follows a move by rival SK Hynix, a South Korean memory chip maker, which agreed in September last year to remove its bonus cap 2.
One union example says a Samsung chip division worker would get less than one-third of the bonus paid to a peer at SK Hynix 2.

A strike could ripple through the chip market

An 18-day walkout could cut about 3% to 4% of global DRAM supply plus 2% to 3% of global NAND supply. That could lift memory chip prices across the tech sector 3.
The dispute comes as SK Hynix has passed Samsung to become Nvidia’s main supplier of High Bandwidth Memory (HBM) chips 2.
A production stop could set off penalty clauses in long-term supply contracts and steer customers to rivals such as Micron, a U.S. memory chip maker 4.
Even a brief disruption could hurt customer trust, with damage that may take years to repair 2.