Samsung shares weaken on union standoff

Samsung Electronics shares fell as much as 4.4% after the company and its largest labor union failed to reach an agreement in mediation talks in Sejong.

The union said it plans to begin a general strike on May 21 after management rejected a proposal already accepted by workers.

The union is seeking the removal of a bonus cap and wants bonuses set at 15% of operating profit with the terms written into labor contracts.

Samsung said the demands were excessive and instead offered bonuses equal to 10% of operating profit along with a one-time payment after accepting most other requests.

The dispute could attract broader market attention because Samsung is the world’s largest memory chipmaker, while South Korea has previously used emergency arbitration to halt major strikes.

🔗 Source: Bloomberg

🧠 Food for thought

Implications, context, and why it matters.

A rival’s bonus plan raises the stakes at Samsung

The union’s push is shaped by a deal at SK Hynix, a South Korean memory chipmaker that set aside 10% of annual operating profit for employee bonuses over the next decade and removed bonus caps 1.
That works out to average payouts of US$460,000 to US$477,000 per worker this year, with estimates nearing US$900,000 next year 1.
Samsung employees got no performance bonus in 2024, and about 200 workers have left for SK Hynix over the past four months 1.
The union’s call for 15% of operating profit comes to about 45 trillion won (US$30.4 billion). That is more than four times the 11.1 trillion won (US$7.5 billion) paid in shareholder dividends last year 2.

The strike hits a pressure point in the AI chip supply chain

Samsung is one of three companies in the world that makes High Bandwidth Memory (HBM), an advanced memory chip used to run AI systems 1.
A strike would slow production at Samsung’s South Korea chip plants, a bottleneck in AI hardware. A one-day walkout earlier cut contract chipmaking output by 58% and memory chip production by 18% during the affected shift 1.
The memory market is already tight. Apple held emergency meetings with Samsung’s chip division and accepted an opening demand for a 100% price increase to secure memory for iPhone 17 production 1.
The dispute is also stirring friction inside Samsung. A smaller union made up mostly of workers in smartphones, TVs, and home appliances has pulled out of the planned joint strike 3.